U.S. milk production is not off to a record-setting start now that 2025 is underway. According to the February World Agricultural Supply and Demand Estimates (WASDE) Milk Production report, forecasts indicate a decline in milk production due to lower anticipated cow inventories, signaling a tighter supply environment.
Production Forecasts
The February milk production forecast came in at 226.9 billion lbs., down slightly from last month’s projection of 227.2 billion lbs. However, this remains nearly 1 billion lbs. ahead of last year’s estimated production of 225.8 billion lbs.
On a fat basis, domestic milk use is expected to decline as reduced production and lower imports limit available supplies. Fat basis exports are also projected to drop to 11.8 billion lbs., down from last month’s forecast of 11.9 billion lbs. While butter exports are anticipated to rise, they will be outweighed by reductions in fluid and dry milk as well as cream product exports. Similarly, on a skim-solids basis, domestic use is forecasted to decrease due to lower production while exports are set to decline primarily due to reduced shipments of nonfat dry milk (NDM) and whey.
Price Forecasts
Milk and dairy product price forecasts for 2025 reflect the revised price formulas introduced under the Federal Milk Marketing Order, officially published in the Federal Register on January 17, 2025, by the Agricultural Marketing Service. According to the latest report, these updated pricing structures have influenced projections across multiple dairy product categories.
For 2025, butter, nonfat dry milk (NDM), and whey prices are expected to decline based on recent market trends, while cheese prices are forecasted to rise. Currently, cheese prices stand at $1.880 per pound, up from $1.865 last month. This increase is driven by tight inventories carried over from 2024, which are expected to remain constrained into the new year.
Meanwhile, both Class III and Class IV milk prices are projected to decline amid broader market pressures. Class III milk is currently forecasted at $19.10 per hundredweight (cwt.), down 60 cents from the previous month. Class IV prices follow a similar trend, dropping $1.10 to $19.70 per cwt.
As for overall milk pricing, the all-milk price estimate for 2024 has been revised upward to $22.61 per cwt., incorporating final reported data through December. However, the 2025 forecast sees a slight adjustment downward, with the all-milk price expected to average $22.60 per cwt.
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