Producer Pay Forecast: February 6, 2025

Since the last update, USDA has released the cold storage report, dairy products, and milk production. As we enter 2026, we now have a complete view of production and stock levels throughout 2025.

Milk supply remains the dominant factor in shaping price expectations. U.S 24-state milk production grew 4.6% YoY in December, supported by larger milking herds(+2.49% YoY December) and higher milk per cow(+2.08% YoY December). While dairy cow slaughter picked up in December and has continued to grow, it has not yet slowed overall milk growth. Internationally, a similar story is unfolding as supply continues to grow across the globe.

Cheese production has remained strong with American cheddar output up 9% YoY in December and American style cheese production up 3.9% over the same period. Cheese production is likely to continue growing due to increased demand for whey products, especially WPC 80 and WPI. American cheese stocks grew 2.4%, while total cheese stocks were up 1.3% YoY in December. Despite the substantial production growth, total cheese stocks were still down 1% YoY in 2025 vs. 2024 due to significant export strength.

Butter markets seem to be firming up slightly. Butter stocks were down 5.15% YoY in 2025 vs. 2024—due to substantial exports. Butter production grew 2% in December, and 5.68% in 2025 vs. 2024 YoY.

On the powder side, NDM and Skim production were down 6% YoY in 2025 vs. 2024, with December production falling 6.2% YoY. This has tightened supply, pushing NDM prices up significantly.

CME Spot Market:

Spot butter has gained some momentum, landing at $1.71/lb. (2/5). Spot blocks moved back into the $1.40's, landing at $1.4675/lb. (2/5). Spot NDM has taken off in recent weeks, coming in at $1.60/lb., while spot dry whey remains rangebound, landing at $0.73/lb. (2/5).

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