November milk production took a tumble as milk volume fell nearly 1% nationally compared to the same month last year. When looking back to July 2023, U.S. milk production has been down 14 of the last 17 months. August, September, and October 2024 were the only months that posted modest gains in milk volume, ranging from 0.5% to 0.6%. When December’s data gets published, the 2023 to 2024 era will be the first time that U.S. milk production fell in back-to-back years since the late 1960s.
Despite the 1% downturn in milk production in November, milk component production — as measured by butterfat and protein pounds — kept on climbing, albeit at a modest 0.19%. During that same 17-month window from July 2023, milk components grew 15 of those 17 months, with July 2023 and June 2024 being essentially flat at minus 0.03% and minus 0.06%, respectively.
An important market development
Consumers are driving change in dairy by demanding more nutrient-dense products such as cheese and butter. Equally important, demand for high-quality dairy proteins is running at an all-time high in both the U.S. and major dairy export markets.
Back in 2000, cheese production absorbed 37.7% of the U.S. milk supply. Fast forward two decades and that figure climbed to 42.5%. Of course, when you make cheese, you also produce whey, and that’s where the protein production narrative comes into play. Butter also has demanded more of the milk supply. In 2000, butter accounted for 16.3% of milk production and grew to 18.6% two decades later.
On the farm, dairy farmers in multiple component pricing (MCP) markets have responded to changing price signals. In 2023, 58% of milk check income came from butterfat, with protein commanding an additional 31%. Other solids and the producer price differential (PPD) rounded out the remaining 11%. When the final 2024 data is calculated, the pricing ratios should largely mirror 2023.
Because MCP is the pricing mechanism for over 90% of the nation’s milk, dairy farmers have responded by sending milk with higher solids milk to processing plants. Below are the butterfat and protein averages in the most recent years based on USDA Agricultural Marketing Service (AMS) data collected by Federal Milk Marketing Orders (FMMO).
- 2020: 3.92% butterfat and 3.18% protein
- 2021: 3.97% butterfat and 3.21% protein
- 2022: 4.06% butterfat and 3.25% protein
- 2023: 4.11% butterfat and 3.26% protein
- 2024: 4.19% butterfat and 3.28% protein*
When looking at 2024, it’s important to note that December data has not been tabulated yet. December is traditionally the highest butterfat and protein month of the year.
Back to November milk production
The main reason November milk production fell is because California has been grappling with highly pathogenic avian influenza (HPAI). With well over half of the Golden State’s dairy herds reporting cases, the state’s November milk output fell by 9.2%. However, November’s national downturn was also propelled by states such as Arizona, Florida, and New Mexico that saw milk production drop by 2.5% to 5.4%. Another dairy juggernaut, Wisconsin, essentially posted no growth, being down 0.3%.
With new plant capacity coming online in Texas and growth continuing in the I-29 corridor, Texas and South Dakota milk production grew over 7% on milk volume when compared to November 2023. That growth was largely driven by more cows as Texas added 40,000 head and South Dakota expanded by 13,000 head. While those states grew their dairy herds, it’s largely been a relocation of cows as the nation’s dairy herd only grew by 20,000 head when compared to one year ago.
That stagnant growth in cow numbers, largely driven by tight dairy heifer inventories and beef semen use on dairy cows, makes growth in milk components all the more important as $8 billion of new dairy plant capacity comes online through 2026.
