The past year began with low prices, continuing the financial problems for dairy farmers from 2023. But price recovery by mid-year spurred profits and milking herd growth. The new year will likely bring some challenges in prices and profits.
Low prices led dairy farmers to reduce the number of milk cows in 2024. Dairy cow numbers bottomed out in July at 9.319 million head. That was the fewest since February 2016. The industry also restrained growth in milk per cow, with actual declines, year over year, in some months. The combination led to lower milk production than the year before in five of the first six months of 2024.
Reduced milk production led to higher milk prices. Cheese, butter, powder, and whey prices all increased. Higher milk prices spurred dairy herd expansion and increasing milk production later in the year – and falling cheese and butter prices. Strategies to cut production have led to tight supplies of replacement heifers. Heifer prices, for those looking to buy, surged to record highs late in 2024. Lower milk production led to a significant drawdown in cold storage stocks of cheese. By late in the year, cheese stocks were 1.34 billion pounds, their lowest level since late in 2019.
By David P. Anderson and Derrell Peel
February 20, 2025
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