CALIFORNIA GOVERNOR GAVIN NEWSOM declared a state of emergency on December 18 in response to highly pathogenic avian influenza (HPAI). The proclamation gives local and state authorities additional resources to grapple with the bird flu outbreak. This includes hiring additional staff or issuing contracts to outside vendors.

SINCE FIRST DETECTED ON AUGUST 30, HPAI has been confirmed on 645 of the state’s 1,000-plus dairy farms. September milk production was flat in the year-over-year comparison. By October, USDA reported that milk production had fallen by 3.8% in the Golden State.

NOVEMBER MILK PRODUCTION FELL by 301 million pounds in California. This 9.2% downturn likely represented HPAI’s peak impact. Since USDA started collecting data in 1935, this is the second largest year-over-year monthly decline on record. The largest reduction in California’s monthly milk flow took place in February 1983 at 13.5%.

TEXAS, THE FIRST STATE TO REPORT HPAI, grew its November milk production 7.3%, and South Dakota matched that growth. Over the past year, Texas added 40,000 cows and South Dakota, 13,000.

USDA PEGGED A $22.55 ALL-MILK PRICE in its 2025 forecast. As a baseline, the projections included an $18.80 Class III and a $20.40 Class IV.

CME FUTURES CONTRACTS TRADED HIGHER than the USDA projections. At the market close before Christmas, January-to-March Class III contracts averaged $19.40 and Class IV netted $20.60. April-to-November Class IV futures continued to trade strong for the remainder of the year at $20.45 while Class III was $18.75 for those same months.

FEED PRICES CONTINUE TO LOOK FAVORABLE as soybeans and soybean meal moved to the lowest levels in over four years based on a projected bumper crop in Brazil. Corn traded near $4.40 per bushel.

BUTTER SALES CONTINUE TO BOOM. In October, domestic butter consumption climbed 11.2% to 217.4 million pounds. Meanwhile, total cheese consumption inched up 0.2% to 1.195 billion pounds, reported USDA’s Economic Research Service. The “other than American” cheese category, paced by Mozzarella, climbed 1.5% to 709.5 million pounds. The American cheese category dropped 1.7% to 485.5 million pounds.

NEAR RECORD U.S. BUTTER PRODUCTION has not satisfied domestic consumer demand. From January to October 2024, the U.S. imported a record 178 million pounds of butter. With just 10 months of the 2024 year on the tally sheets, that already doubled the 83.4 million pounds from 2020, and it’s up 17-fold from 2013 as shown in the chart below.