Cheese consumption hits all time high

The “Mielke” Market Weekly

U.S. cheese consumption hit an all-time high in 2025 according to data from the U.S. Department of Agriculture’s Economic Research Service. However, cheese consumption is not keeping up with cheese output. The USDA issued December and January supply and utilization data March 13, as both were delayed by the previous government shutdown. Highlights from the January data follow.

Cheese utilization totaled 1.29 billion pounds, up 5.7% from January 2025, and it marked a record for the month, according to HighGround Dairy Inc., due to domestic utilization and exports setting highs for the month. Domestic use hit just under 1.2 billion pounds, up 5.2% from January 2025, while exports, at 114 million pounds, were up 10.8% from a year ago.

Butter disappearance totaled 213.1 million pounds, up 14.6% from a year ago, exceeding 200 million for the first time ever, according to HGD. Domestic usage hit 192.8 million pounds, up 7.8%, while exports came in at 20.3 million, up 185.9%. HGD said November’s data was abysmal but turned out two very strong months in December and January, both totals set monthly records, and on a 30-day adjusted basis, December ranked third all-time.

Dry whey totaled 73.7 million pounds, up 1.9% from a year ago. “Robust export volumes narrowly offset record low January domestic use,” said HGD. “In contrast, although total whey protein concentrate utilization was positive year-over-year, it was due to strong domestic consumption while exports languished.”

Nonfat-skim milk powder utilization hit 189.3 million pounds, up 20.8% from a year ago. Domestic use was up 23.9%, and exports were up 19.2%. Both were up year over year for the first time since May 2025, said HGD. “However, totals are not overly robust and smaller than in other years.”

Fluid milk sales took a dip in starting 2026. USDA’s latest data showed January packaged sales at 3.766 billion pounds, down 2.3% from January 2025 following a 1.2% slippage in December. Conventional product sales totaled 3.5 billion pounds, down 2.1% from a year ago. Organic sales, at 261 million, were down 5.4% but represented a typical 6.9% of total milk sales in the month.

Whole milk sales totaled 1.4 billion pounds, up 1.6% from a year ago. Whole milk represented a typical 37.2% of total sales for the month. Skim milk sales, at 144 million pounds, were down 10.3% from a year ago.

The April Federal Order Class I base milk price was announced at $18.66 per hundredweight, up $3.19 from March, 91 cents below April 2025 but the highest Class I price since September 2025.

It equates to $1.60 per gallon, down from $1.68 a year ago. The 4-month Class I average stands at $16.30, down from $20.56 a year ago, and it compares to $18.61 in 2024.

USDA issued January and February Chinese import data this week and HGD says it showed the weakest start since 2018. Whole milk powder took the biggest hit and sank to a 16-year low, said HGD, as “China’s procurement strategy will likely shift as they adjust to full free trade with New Zealand. The need to rush product in is gone. Second, domestic farmers are in a lot of pain and the government continues to promise aid to those producers.”

Cheese imports were up 31%, according to HGD, with most imported from New Zealand and Australia, but sailings from Europe also rose. Imports from the U.S. were down 54%, said HGD, despite U.S. product being the cheapest in the world.

Whey shipments were down drastically. Imports from the U.S. were down 1.5%. HGD says, “The Chinese hog population is declining slowly, resulting in a steady drop in whey needs from the U.S. Hog prices in China have fallen to their lowest level since 2019, putting financial pressure on pork production companies. If the reduction in the hog herd begins to speed up, whey imports may decline more rapidly as well,” HGD said.

Back home, while the Fed voted this week to keep interest rates where they are, dairy margins weakened in the first half of March from a combination of lower milk prices and steady to slightly higher feed costs, according to the latest Margin Watch from Chicago-based Commodity and Ingredient Hedging LLC.

“Most of the pressure on milk futures was due to weakness in the Class III market,” MW said, “with Class IV Futures continuing to see strength from butter and nonfat dry milk powder. After a strong butter rally recently, butter futures sold off back below $2.00 per pound, although a rally in powder futures helped offset this. Butter has been supported by strong export sales despite a continued surge in output. According to USDA’s dairy products report, January butter production of 231.5 million pounds rose 6% from 2025, although this increase was offset by the highest January butterfat exports since 1994.”

“USDA Census Bureau trade data shows January 2026 butterfat exports exceeded 30.4 million pounds,” the MW said, “with one-third of the volume consisting of anhydrous milkfat, which exceeds 98% butterfat. Consequently, the butterfat equivalent of January’s butter and milkfat exports exceeds 14,900t and represents 14% of U.S. butter production in January. Cheese production during January of just under 1.3 billion pounds was up 4.7% from last year, with a 6.5% increase noted in Italian varieties, which exceeded 3.9% growth in the American category, although it should be noted that cheddar was up 7.4% from last year.”

“January cheese exports of 51,700t were up 11% from last year, though down 4.5% from December. Mexico accounted for 30% of total cheese exports in January, but exports to our southern neighbor were the lowest since March 2025 and almost 20% below December as the U.S. dollar continues to strengthen relative to the Peso, in part resulting from the war with Iran,” the MW said.

This week’s livestock, dairy, and poultry outlook said, “Dairy herd expansion is expected to continue into 2026, consistent with 2025 trends and supported by dairy cow numbers reported through January 2026, recent culling patterns, and expected cow retention. Based on recent data, the number of dairy cows forecast in 2026 has been revised upward to 9.57 million, an increase of 30,000 from the previous forecast and 72,000 head more than in 2025. Milk output per cow has been revised downward to 24,520 pounds, a decrease of 65 pounds from the previous forecast, but still 129 pounds higher than in 2025.”

Dairy cow slaughter in January was only slightly below last year’s levels on a monthly basis, according to the outlook. “However, available data for February suggests an uptick in slaughter activity that aligns with seasonal patterns in dairy cow slaughter; dairy cow slaughter increases in the spring when spring flush in milk production tends to depress milk prices. While year-to-date slaughter data points toward more slaughter activity than last year, January dairy cow average inventories indicate that farmers driven by the high returns from beef-on-dairy practices are still retaining cows in production despite recent falling milk prices.”

The outlook also warned, “On March 6, workers at the JBS beef plant in Greeley, Colorado, gave notice to management that they plan to strike at midnight March 15. In anticipation of the walkout, industry analysts have noted that JBS was halting slaughter starting March 9 to finish processing remaining carcasses. It is estimated that JBS harvests 5,000–6,000 head per day at their Greeley plant. JBS spokespeople said that it will “temporarily shift production to other JBS facilities where we currently have excess processing capacity.”

Speaking of cow slaughter, USDA reports that 58,300 dairy cows were culled the week ending March 7, up 2,900 head or 5.2% from a year ago. Year to date 576,200 cows had been culled, up 37,100 head or 6.9% from a year ago.

Chicago Mercantile Exchange block Cheddar marched to $1.6625 per pound Friday, the highest since Nov. 11, 2025, up 13.25 cents on the week, and 6 cents above a year ago, as traders anticipated the afternoon’s February milk production report. The barrels saw their Friday finish at $1.57, 4 cents higher on the week, and 2 cents above a year ago. Trades totaled seven loads of block on the week and no barrels.

Milk output is strong in the Central region, reports Dairy Market News, though some cheesemakers said production was lighter this week. A winter storm that hit the upper Midwest over the weekend contributed to transportation delays. Snow limited travel for staff and contributed to lighter cheese output. Retail cheese demand is strong ahead of the spring holidays, but food service interest is lighter. Rising shipping costs are negatively impacting export demand.

Cheese production in the West is steady to strong as plenty of milk is available. Domestic cheese demand is generally strong. Retail and food service demand is outpacing bulk. Export interest has softened, with contacts concerned about increased costs for transportation, according to DMN.

Cash butter closed Friday at $1.80 per pound, 4.75 cents lower on the week and 50.25 cents below a year ago. There were 70 sales on the week.

Plenty of milkfat was available for cream production in the Midwest, said DMN, and demand from Class II and Class III processors is strong. Transportation and staffing issues due to the storm caused some downtime. Retail butter interest is steady, but contacts report soft food service demand. High transportation costs are negatively impacting export demand somewhat, but U.S. butter remains competitive and exports are strong overall, according to DMN.

Cream production is strong in the West, as milk output remains above a year ago. Class II cream demand is picking up and cream inventories are tightening. Retail butter demand is strong. Food service interest is steady. Export demand is strong but was somewhat lighter this week due to increasing shipping costs.

The March 18 Daily Dairy Report said, “The more recent downturn in (butter) prices could be related to demand stepping back from its breakneck pace. Easter and Ramadan are earlier in 2026 than in previous years, meaning some demand was shifted into January and February from March and April. Furthermore, with the ongoing war in the Middle East and a blocked Strait of Hormuz, imports to the region are limited, which is also curbing demand slightly.”

Grade A nonfat dry milk remains the star and climbed to $1.87 per pound Friday, the highest CME price since June 8, 2022, 10.50 cents higher on the week and 72.50 cents above a year ago on 34 trades. HGD said the powder closed above the butter price this week for the first time since April 15, 2014.

Dry whey fell to 63.50 cents per pound Wednesday. It closed Friday at 66 cents per pound, unchanged on the week but 16 cents above a year ago, with four trades.

The global price climb slowed this week as the 400th Global Dairy Trade weighted average inched up just 0.1%, following a 5.7% jump March 3, but it was the sixth consecutive advance. Volume climbed to 43 million pounds, up from 41.6 million March 3. The average metric ton price hit $4,330 U.S., up from $4,301 March 3 and the highest since July 15, 2025.

Anhydrous milkfat led the gains, up 6.4% following a 5.7% gain March 3. Butter was down 0.9%, however, after jumping 6.1% last time. Skim milk powder was up 5.2% after leading the gains last time with a 9.1% jump. Whole milk powder was down 4.0% after advancing 4.5%. Lactose was off 0.3%, following a 3.9% dip. Cheddar inched 0.1% higher, following a 4.3% gain, and Mozzarella was up 0.5% after jumping 7.9% last time.

StoneX said the GDT 80% butterfat butter price equates to $3.0392 U.S. per pound, up from $2.9773 March 3, and it compares to CME butter, which closed Friday at $1.80. GDT cheddar equated to $2.2338, up from $2.2316 last time, and it compares to Friday’s CME block cheddar at $1.6625. GDT skim milk powder averaged $1.5462 per pound, up from $1.4708, while whole milk powder averaged $1.6822, down from $1.7523. CME Grade A nonfat dry milk closed Friday at $1.87 per pound.

In politics, Tony Rice, senior director of trade policy at the National Milk Producers Federation and U.S. Dairy Export Council, testified Tuesday before the House Judiciary Subcommittee on the Administrative State, Regulatory Reform and Antitrust on maritime supply chain challenges faced by the U.S. dairy industry.

A joint press release said the U.S. exported $9.6 billion worth, or 3 million metric tons of cheeses, milk powders, whey proteins and other dairy products last year, making reliable transportation vital to its economic well-being. Yet American dairy exporters have little choice but to rely on a small number of ocean carrier options, almost all of which are foreign owned. When export shipments are delayed, cancelled or become more expensive to move, the disruptions ripple back through the supply chain and ultimately affect farm income.

Meanwhile, U.S. ag groups are watching pending negotiations between the U.S., Mexico and Canada as they work on renewing the U.S.-Mexico-Canada trade agreement. NMPF’s Tony Rice said, “The USMCA agreement has brought a tremendous number of benefits in growing our exports to Mexico, and simultaneously to Canada, while servicing the demand in those two markets.”

In other trade news, NMPF and USDEC praised last week’s signing of a U.S.-Ecuador agreement on reciprocal trade. A joint press release said, “The agreement would improve export opportunities for U.S. dairy products in a market that has been plagued by restrictive tariffs and nontariff trade barriers.”

“The deal is slated to eliminate tariffs on several U.S. dairy products; recognize U.S. regulatory oversight, including commitments to eliminate facility listing requirements and accept dairy certificates issued by U.S. regulatory authorities; overhaul Ecuador’s burdensome import licensing system for agricultural products; and protect 40 common cheese names,” said NMPF.