Record Cheese and Butterfat Exports Fuel Unstoppable Momentum, But Trade Tensions Threaten the Global Market.
The U.S. dairy industry has proven its undeniable momentum in the first half of 2025, driven by surging international demand and favorable market dynamics. Data from June highlights this success, showing total U.S. dairy export value soaring to $4.72 billion year-to-date, marking a significant 15% increase compared to the previous year. This performance is largely attributed to improved domestic milk production coupled with tepid domestic demand, which has kept U.S. products competitively priced for global buyers, making the US a crucial supplier of choice.
The standout performance belongs to high-value dairy products. Cheese exports have been a primary growth driver, setting a new record in June, with an overall growth of 7% by volume and 18% by value through May 2025 compared to 2024. This reflects a voracious global appetite, which the U.S. is uniquely positioned to meet through competitive pricing and logistical advantages. Equally dramatic is the surge in butterfat exports, which rose an extraordinary 151% in the first half of 2025, gaining market share against European competitors. Even higher-value products like high-protein whey saw year-to-date growth of 8% in volume and 30% in value, despite volatility earlier in the year.
However, this export-driven boom is unfolding against a backdrop of severe trade policy turbulence. While recent trade deal progress, such as with Indonesia, offers encouragement, the overall global trade environment remains highly volatile. The USMCA, which governs trade with top markets like Mexico and Canada, is not immune to political volatility, and past experience shows dairy is often among the first sectors targeted when trade tensions escalate. Producers and exporters must navigate this landscape, as a significant portion of U.S. milk (about one in six gallons) is reliant on foreign markets.
Compounding the trade risk is the lingering impact of protectionist measures, specifically the Chinese retaliatory tariffs, which have heavily weighed down sales to that crucial market. Furthermore, non-tariff hurdles pose additional risks, as certain markets like Japan and Mexico experienced significant drops in whey imports earlier in the year. Industry analysts caution that pervasive uncertainty and new trade policies that fail to improve global access could quickly upend global demand and negatively impact the very dynamics that currently favor the U.S. industry.
Despite these geopolitical headwinds, the industry’s long-term future remains bright, buoyed by strong fundamentals like rising domestic demand for fluid milk and dairy foods—with overall per capita consumption at its highest since the 1950s—and a massive wave of private investment. Manufacturers are betting $10 billion on new processing capacity between 2023 and 2026, a clear signal of confidence in sustained consumer demand both domestically and globally. This investment in state-of-the-art facilities is key to absorbing production growth and maintaining a competitive edge in the international dairy market.
Source: Find the original market analysis and data from Dairy Herd Management.
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