Milk Market – United States
In March 2024, avian influenza was detected in US dairy cattle, leading to a 5–15% drop in milk production among lactating cows, depending on the cow's age and feed conditions. Since then, Highly Pathogenic Avian Influenza (HPAI) has been confirmed in 17 states and more than 754 herds. California has been most affected, reporting 64 infected herds at the time of writing. While the mortality rate has remained below 2%, most infected cows have returned to 95% of their pre-infection production levels. The disease has spread primarily via bovine-to-bovine contact during interstate cattle movement, prompting a federal testing order for cattle prior to transit beginning in April 2024.
California recorded the largest month over month production decline in November 2024 at -9.2%, contributing to a 1% nationwide drop. This disruption in supply led to late-year price increases in butter and milk powders. Concerns remain high heading into the 2025 milk flush season, as no approved vaccine is currently available.
The 24 highest-producing states, accounting for roughly 90% of national output are closely monitored, with California, Wisconsin, Idaho, Texas, and New York together supplying more than half of all US milk. National milk production in 2024 was down 0.2% compared to the previous year.
2025 began with continued challenges. January production rose only 0.5%, followed by a 2.5% decline in February. While California remains under pressure, states like Idaho, Texas, South Dakota, and Kansas are showing growth, supported by new processing capacity.
Milk per cow numbers have been consistently below 2024 figures, driven by genetics, feed quality, and weather conditions.
However, milk component levels, such as protein and fat are increasing month over month, providing more processing value per pound of milk. With more than 80% of US milk directed into food production, these components are increasingly important.
Low herd numbers remain a concern as producers evaluate dairy versus beef market profitability. Nevertheless, the US dairy herd added over 75,000 head in early 2025, reaching the largest total since May 2023.
Class IV milk prices were strong throughout most of 2024 but began to decline in early 2025 due to rising production and trade uncertainty. Class III prices increased steadily from June to October 2024 amid growing industrial demand, then declined in parallel with Class IV as supply climbed.
US Forecasting Insight
We have seen the price of US milk come down since Q4 last year after reaching a significant peak. Currently, prices remain in a downtrend, but the downside potential should be somewhat limited. Therefore, we forecast an increase in prices throughout most of the remainder of the year. This expected increase is partially driven by the usual seasonal pattern of a significant peak around September. However, we do not expect that prices will make another spike, as we have seen previously, unless something disrupts the market drastically. One such thing could be a wider spread of HPAI in milk cattle or natural disasters which cannot be forecasted.
Milk Market – European Union
Total cow milk production in the EU fell for the second consecutive year in 2024, totaling 142.9 million metric tonnes, down 1% year over year. A key factor was herd reduction, driven by uncertainty surrounding new environmental regulations targeting nitrogen and greenhouse gas emissions.
Disease outbreaks also affected production. Bluetongue Virus (BTV-3) and Epizootic Hemorrhagic Disease (EHD), while typically mild, caused short-term yield losses, fertility issues, and occasional mortality. In addition, adverse weather disrupted production. A wet early summer kept cattle indoors longer and hindered fodder production, especially in Ireland, which relies heavily on pasture-based systems.
The Expana Benchmark prices (EBP), Expana Code ED24 of German milk rose steadily through 2024, peaking at €680/MT in November. Prices were supported by seasonally reduced supply and firm industrial and retail demand. As milk volumes declined, processors became more active in the spot market to secure supplies. Prices dropped sharply in December following an unexpected production uptick in the final six weeks of the year.
Early 2025 began with a bullish sentiment. January and February saw reduced output from Germany (-4.3%), France (-4.1%), and the Netherlands (-3%) compared to the previous year. However, seasonal output increases in March led to a more bearish market sentiment heading into Q2.
EU Forecasting Insight
We have seen the price of German milk (ED24) come down since the peak in early March. This decline has made prices enter a downtrend once again. This is likely a continuation of the previous downtrend, which began in November 2024. We expect that prices will continue to decline in Q2, which is the usual seasonal pattern. However, as prices peaked in March instead of February, which is the usual pattern, we may see the decline extend slightly longer in Q2 than we have seen previously. Once the decline is over, we should see prices increase towards the seasonal peak around September. However, prices should remain below the previous peak from November, unless something disrupts the market drastically, like a widespread disease, affecting the milk output.
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