The U.S. Department of Agriculture’s latest dairy supply and utilization report had good news for the dairy industry. April cheese utilization hit 1.2 billion pounds, up 1.5% from April 2024, an all-time high on a 30-day adjusted basis, says HighGround Dairy.
Speaking in the June 23 Dairy Radio Now broadcast, HighGround’s Curtis Bosma said it was a good thing that demand was so strong because April cheese production was the highest as well. Domestic demand was up 1% and characteristically makes up 90% of the usage, but exports were up a strong 6.8%, totaling 108.9 million pounds.
Butter disappearance, at 209.9 million pounds, was up 24.4%, a record high for April, “The Easter holiday drove domestic consumption up 36.3 million pounds, up 22.3%, compared to a year ago. Exports remain elevated due to the substantially discounted U.S. prices compared to the rest of the world. They were down from the high observed in March but still up 87.5% from a year ago,” Bosma said.
Nonfat and skim milk powder use totaled 189.3 million pounds, down 2.7%, but that was the smallest year-over-year loss since January 2023, according to HGD. “Greater domestic utilization helped to partially offset the decline in exports,” HGD said, “Which marked the lowest April since 2016.”
Dry whey utilization, at 70.7 million pounds, was down 21.4% from a strong 2024. Exports were down 2.9%. “Increased trade tensions with China resulted in a barrage of new tariffs on U.S. goods,” HGD said. “Although China and the U.S. announced a trade truce in June, lowering tariffs, the back and forth in April saw less whey move to China, the top destination, and thus reduced exports overall.”
The USDA’s latest livestock slaughter report showed an estimated 196,700 dairy cows were slaughtered under federal inspection in May, down 10,500 head from April and 19,300 head or 8.9% below May 2024. Total to date, 1.1 million head had been culled, down 181,700 or 15.1% from 2024.
The agriculture department’s latest Livestock, Dairy, and Poultry Outlook, issued June 18, mirrored milk price and production projections in the June 12 World Agricultural Supply and Demand Estimates report. The Outlook stated, “With favorable farm margins and low dairy cow slaughter rates, the national dairy herd continued to expand in April despite tight numbers of replacement heifers and lingering highly pathogenic avian influenza (HPAI) concerns.”
April was the seventh consecutive month of year-over-year growth in dairy livestock inventory. The recent milk production report showed the average number of cows in April was 9.425 million, up 89,000 from a year ago and 5,000 more than March. The milk-per-cow estimate was 2,055 pounds, up 0.5% from April 2024. Driven by both a higher number of cows and higher productivity, April milk output was estimated at 19.37 billion pounds, up 1.5% from a year ago.
The year-over-year increase in the number of dairy cows and milk per cow was unevenly distributed among the top 24 states, according to the Outlook. Texas, Idaho, Kansas and South Dakota led the expansion by adding a total of 110,000 head. Additional milk processing capacity has been added and/or is expected to come online in some of these states. Milk per cow per day increased across most of the 24 states. Exceptions included Iowa, Oregon, Washington and California. California registered the largest decline on a percentage basis. California is the state with the highest number of dairy herds impacted by HPAI from September through December 2024. Since then, the monthly number of reported outbreaks has declined significantly both in California and elsewhere. However, as of June 16, the majority of 2025 outbreaks (139 out of 156 nationwide) were in California and Idaho.
Cheese prices plunged in the Juneteenth-holiday-shortened week. The markets were closed Thursday. Block Cheddar closed Friday at $1.6650 per pound, as traders anticipated the afternoon’s May milk production report. The blocks were down 17.25 cents on the week, lowest since April 4 and 18 cents below a year ago. The barrels finished at $1.6575, 17.75 cents lower, lowest since March 31 and 26.25 cents below a year ago. Sales totaled 36 lots of block and six of barrel.
StoneX said, “U.S. domestic cheddar consumption, our largest cheese market, has been the worry this month on top of waning export demand. Nonetheless, as U.S. cheese markets have been weaker, EU (European Union) mozzarella prices are only down 3-5 cents this month to about $2.25 per pound. So the gap between these two markets is widening again with a U.S. dollar that is still weak; we can’t discount another wave of export demand in the short term that could tighten spot supplies.”
Warmer weather is contributing to lighter milk output in much of the Central region, according to Dairy Market News, but cheesemakers say unplanned downtime at some plants left plenty of milk available. Spot loads traded $7-under to flat this week. Cheese production remains strong in the region, although the plant downtime contributed to lighter output overall. Domestically-produced cheese is priced competitively in international markets and contributing to strong exports. Domestic demand is mixed. Retail demand is steady, but food service sales are declining, says DMN, and more cheese made its way to the Chicago Mercantile Exchange.
Class III milk demand from western cheese manufacturers is strong, says DMN. Availability varies. Cheese output is steady, and some inventories are extremely tight but are available. Domestic demand is steady. Export demand is stronger.
Butter hit $2.5925 per pound Monday, the highest since Jan. 13, but it closed Friday at $2.50, down 7 cents on the week and 59 cents below a year ago. There were 31 sales on the week, down from 135 the previous week.
Cream output is declining in the Central region as warmer temperatures negatively impact milk components. Components are down week-to-week, but fat content is up from a year ago, leaving plenty of cream available. Ice cream makers continue to pull on cream supplies, and butter makers are actively churning as they work to stock butter for use later in the year. Domestic butter demand is steady to lighter. High prices for butter produced internationally are contributing to strong exports. Some plants are increasing their 82% butterfat product to meet this export demand and reducing 80% output, DMN said.
Western butter makers convey that cream is being received but spot load availability is tighter in some parts of the region. Butter output varies from steady to strong. In a few cases, cream availability is limiting stronger churning. Butter manufacturers are seasonally building stock. Domestic demand is steady and international buying is strong, thanks to the very competitive U.S. prices.
Grade A nonfat dry milk made it back to $1.28 per pound Wednesday but closed Friday at $1.26, down 0.75 cents on the week while 5.50 cents above a year ago. There were seven sales on the week.
Dry whey closed the week at 57 cents per pound, 1.75 cents higher and 10 cents above a year ago, with 10 CME sales for the short week.
StoneX predicts May milk production will be up 1.7% from last year and possibly stronger. “Production continues to improve in California, it doesn’t seem like there is any shortage of milk in other parts of the country, and we are going to be lapping over weak production last year as the first wave of bird flu was depressing production. Fat and protein in the milk pooled in May was up from last year, but the gains in fat were a little slower than recent months,” StoneX said.
The July Federal Order Class I base milk price was announced at $18.82 per hundredweight, up $1.56 from June but $2.29 below July 2024. It equates to $1.62 per gallon, down from $1.82 a year ago. The 7-month Class I average stands at $19.53, up from $19.16 a year ago, and it compares to $19.42 in 2023.
According to the latest Margin Watch from Chicago-based Commodity and Ingredient Hedging LLC, “Dairy margins were weaker over the first half of June as lower milk prices more than offset the impact from cheaper feed costs.”
“While competitive dairy product prices and recent dollar weakness have helped to support export markets, domestic demand has been somewhat lackluster amidst increased dairy product production,” the MW warned.
“U.S. cheese production in the first quarter of 3.563 billion pounds was up 1.1% from last year after adjusting for leap year, with export demand of 310.6 million pounds through March, up 8.2% from a year ago. Cheese production accelerated in April, with output of 1.229 billion pounds up 3.1% from 2024 and cheddar production up 8.1% from last year as new capacity came online. Despite this, first quarter usage of 3.295 billion pounds was the smallest since 2021, down 0.8% from the same quarter a year ago. This follows annual domestic cheese utilization last year of 13.52 billion pounds, which was essentially flat with 2023. Additional processing capacity and higher components will continue increasing cheese production throughout 2025, so waning domestic demand is not supportive as exports make up only 10% of the market,” MW said.
“Butter demand by contrast has been stellar. April butter production of 215.812 million pounds was up 3.9% compared to the same month last year, with strong domestic consumption and April exports up 87% year-over-year, preventing butter stocks from accumulating in cold storage. U.S. butter prices are more than $1 per pound cheaper (fat adjusted) than EU or Oceania supplies, which is helping to support exports despite U.S. product not being favored in the international market,” the MW said. “Our clients are looking to make strategic adjustments to add upside price flexibility on milk hedges and taking advantage of favorable feed costs to strengthen corn and soybean meal hedges.”
The USDA’s latest crop progress report shows 94% of the corn crop emerged, as of the week ending June 15, up from 87% the previous week, 2% above a year ago and dead even with the 5-year average. Seventy-two percent was rated good to excellent, up 1% from the previous week and dead even with a year ago.
The soybeans are 93% planted, up from 90% the previous week, 1% ahead of a year ago and 1% behind the 5-year average. Eighty-four percent were emerged, up from 75% the previous week, 4% ahead of a year ago and 1% ahead of the 5-year average. Sixty-six percent were rated good to excellent, down 2% from the previous week and 4% behind a year ago.
Powder continued its drag on the international dairy market. The June 17 Global Dairy Trade weighted average was down 1.0%, following a 1.6% decline on June 3. Volume fell to 33.5 million pounds, down from 36 million on June 3. The average metric ton price crept to $4,389 U.S., up from $4,332.
Lactose led the declines, down 3.6%, after a 2.0% drop on June 3. Whole milk powder was down 2.1%, following a 3.7% decline, and skim milk powder was down 1.3% after a 1.1% loss. Anhydrous milkfat was off 1.3% after gaining 1.4% on June 3. Butter was up 1.4%, after holding steady last time. GDT mozzarella was down 1.9%, following a 2.3% gain last time, but GDT cheddar jumped 5.1% after dropping 4.2% on June 3.
StoneX said the GDT 80% butterfat butter price equates to $3.4913 per pound U.S., up 3.5 cents, after holding steady last time, and it compares to CME butter, which closed Friday at a bargain $2.50. GDT cheddar equated to $2.2643, up 10.6 cents after dropping 11.3 cents, and it compares to Friday’s CME block cheddar at $1.6650. GDT skim milk powder averaged $1.2588 per pound, down from $1.2730. Whole milk powder averaged $1.8523 per pound, down from $1.8930. CME Grade A nonfat dry milk closed Friday at $1.26 per pound.
In politics, the dairy industry is concerned over the Trump administration’s mixed messages on deporting illegal immigrants. After stating it would back off on the agriculture, hotel and restaurant industries, it then reversed that position. Border czar Tom Homan said they will continue to conduct raids at worksites, including farms, but that criminals will be their priority.
The National Milk Producers Federation said, “The dairy industry has historically relied on skilled immigrants to make up for labor shortages in rural America.”
“The president is right about securing the border, but any enforcement action needs to go hand-in-hand with a labor reform package,” said Jim Boyle, co-owner of Casa Grande Dairy Co., a 3,600-cow operation in Casa Grande, and chairman of the NMPF Immigration Task Force.
Meanwhile, a Wisconsin dairy farmer has filed a federal lawsuit against the Trump administration, charging that it is illegally denying financial assistance to white farmers.
Agriculture Secretary Brooke Rollins launched an $8.5 million sterile New World screwworm fly dispersal facility in South Texas this week and announced a 5-pronged plan to enhance USDA’s ability to detect, control and eliminate the pest.
Last but not least, changes are coming to the Dairy Revenue Program, Livestock Revenue Program and Livestock Gross Margin Program for the 2026 crop year, which begins July 1.
The June 18 Daily Dairy Report said, “These programs are insurance products regulated by the USDA’s Risk Management Agency, and the changes will be beneficial to dairy farmers. For LRP, two new offerings will impact dairy farmers. The feeder cattle endorsement will incorporate beef-dairy crosses into the unborn calf category, which covers animals up to 2 weeks old. Cull dairy cows will be added to the fed cattle endorsement.” The DDR said, “The feeder cattle unborn Calf option was previously available, but the addition of crossbred calves was a huge win for dairy.”
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