EU slaps $28B in tariffs on US goods, including dairy. But is this trade war a blessing in disguise for American dairy farmers? The answer may surprise you.
EXECUTIVE SUMMARY: The EU’s announcement of $28 billion in counter tariffs on US goods, including dairy products, adds another layer of complexity to an already turbulent global trade landscape for American dairy producers. While these tariffs threaten established trade flows, USDA data shows US dairy exports remain strong, with projections reaching $8.5 billion for fiscal 2025. The article reveals a nuanced picture of US-Canada dairy trade, highlighting underutilized quotas and complex market access issues. Despite challenges, some industry leaders see the current trade tensions as an opportunity to address longstanding imbalances, particularly with the EU. The piece offers practical strategies for dairy producers to navigate this volatile environment, emphasizing the importance of understanding regional impacts, implementing layered risk management, and maintaining production flexibility.
KEY TAKEAWAYS:
EU announces $28B in counter tariffs on US goods, including dairy, amid ongoing global trade tensions
USDA projects strong US dairy exports for 2025 despite trade challenges, forecasting $8.5 billion
US dairy exporters currently utilize only 42% of their available tariff-free quota to Canada, revealing complex market access issues beyond headline tariff rates
Industry experts recommend tailored risk management strategies and production flexibility to navigate trade volatility
Some US dairy leaders view trade tensions as an opportunity to address longstanding market access imbalances, particularly with the EU
The European Union has announced sweeping counter-tariffs targeting $28 billion worth of American goods, including dairy products. This latest development adds to mounting trade pressures facing US dairy producers, who are already navigating trade tensions with Canada and China. With multiple trading partners implementing restrictions simultaneously, US dairy exports face unprecedented challenges in global markets.
DAIRY INDUSTRY CAUGHT IN CROSSFIRE OF GLOBAL TRADE TENSIONS
The global dairy trade landscape is experiencing unprecedented turbulence as the European Union becomes the latest trading partner to announce retaliatory measures against the United States. This EU announcement creates a complex trade environment where multiple major US dairy export markets implement trade barriers simultaneously.
European Commission President Ursula von der Leyen announced the EU will impose tariffs on 26 billion euros ($28 billion) worth of US goods – with dairy products specifically named alongside soybeans, almonds, distilled spirits, and other items.
“We deeply regret this measure. Tariffs are taxes. They are bad for business, and even worse for consumers,” von der Leyen stated during the announcement. “These tariffs are disrupting supply chains. They bring uncertainty to the economy. Jobs are at stake. Prices will go up. In Europe and the United States.”
The timing couldn’t be more challenging for American dairy producers, who shipped $8.02 billion in dairy exports globally in fiscal 2024 and are projected to reach $8.5 billion in fiscal 2025, according to USDA data released in February 2025. This projection was raised by $100 million from earlier forecasts “on increased price competitiveness for US exports of cheese and butter, with robust demand for those products in North America, South America, and the Middle East/North Africa.”
US-CANADA DAIRY RELATIONSHIP: A COMPLEX REALITY
While much political rhetoric has focused on Canadian dairy barriers, official data reveals a more nuanced picture. According to the International Dairy Foods Association, the US exported more than $1 billion of dairy products to Canada in 2022, making it the second-largest market for US dairy exports.
However, US dairy exporters face a complex system of Tariff Rate Quotas (TRQs) when selling to Canada. Under the USMCA agreement negotiated during the Trump administration, Canada agreed to eliminate tariffs on specific quantities of US dairy imports across 14 categories. However, official data shows that US exporters utilize only 42% of their available tariff-free quotas, with 9 of the 14 TRQs falling below half the negotiated value.
This limited utilization suggests the primary challenges for US dairy exports to Canada may lie beyond the headline-grabbing 200%+ tariff rates, which only apply after these quota limits are reached. As Becky Randall, senior vice president of trade and workforce policy at the International Dairy Foods Association, explained: “We don’t love the tariffs, but the main issue is that we can never fill the quota, to begin with,” due to what she describes as Canada’s administrative strategies that limit US market access.
EU-US DAIRY TRADE IMBALANCE
Direction
Annual Value (USD)
EU to US
$3 billion
US to EU
$115 million
The table above illustrates the significant trade imbalance in dairy products between the European Union and the United States, which has persisted despite the US generating billions in global dairy exports. This disparity helps explain why some US dairy officials see the current trade tensions as an opportunity to address longstanding market access issues.
PRACTICAL STRATEGIES FOR DAIRY PRODUCERS AMID TRADE TURMOIL
For American dairy producers navigating this volatile trade environment, University of Wisconsin dairy economists have been modeling impacts and identifying practical approaches:
First, assess your operation’s specific exposure to export markets. With nearly one-fifth of US dairy components exported (mostly nonfat solids), understanding how your milk utilization might be affected by shifting trade flows is critical. Operations selling to processors heavily involved in export markets face risks different from those supplying primarily domestic channels.
Second, implement a layered risk management approach. Leonard Polzin from the University of Wisconsin suggests dairy producers consider the combined impacts of changing trade conditions, labor costs, and domestic consumption patterns. Their economic models show program cuts to nutrition programs like SNAP could reduce domestic dairy demand by approximately 4%, creating additional pressure beyond export challenges.
Third, analyze regional production economics carefully. Dr. Charles Nicholson’s modeling at the University of Wisconsin has identified significant differences in how trade disruptions affect different dairy production regions, with some areas maintaining more substantial margins despite trade challenges.
Fourth, maintain flexibility in production planning. USDA projects increased US dairy exports for 2025 despite trade challenges, and the fundamental global demand for dairy remains strong. Producers who can navigate the near-term market volatility while maintaining production capacity will be positioned to benefit when trade conditions normalize.
THE PATH FORWARD: NAVIGATING DAIRY’S NEW NORMAL
For forward-thinking dairy producers, this period of trade disruption demands both defensive positioning and strategic vision. Jim Mulhern, former president of the National Milk Producers Federation, emphasized the importance of enforcing trade agreements: “We must utilize USMCA’s enforcement mechanisms to bring home its hard-fought wins for America’s dairy farmers.”
According to the International Trade Commission, proper implementation of USMCA provisions could increase US dairy exports by more than $314 million annually – but realizing this potential requires vigilant enforcement of market access provisions.
As this situation unfolds, The Bullvine will continue monitoring developments and providing actionable intelligence for dairy producers navigating these turbulent trade waters. The dairy industry has weathered numerous challenges throughout its history – from regulatory changes to shifting consumer preferences – and has consistently emerged stronger through adaptation and innovation. This trade confrontation represents another challenge to test the industry’s resilience and creativity.
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Powder inventories surged 41%, while processors accelerated production despite looming trade wars. The January dairy products report exposes alarming disconnects between market signals and manufacturing decisions, threatening processor and farm profitability as spring production increases.
EXECUTIVE SUMMARY: The January 2025 Dairy Products report reveals troubling production misalignments that demand immediate attention. NFDM production jumped 11% despite inventories already 41% above last year, while cheese and butter showed minimal growth despite increased milk supply. Italian cheese varieties (+2.2%) outperformed American types (+0.2%), suggesting shifting market preferences. Meanwhile, processors appear to redirect components toward consumer packaged goods like ice cream (+20.1%) and cream cottage cheese (+18.0%) while neglecting export-oriented products just as trade tensions escalate with Mexico. These patterns create significant price risks as spring flush approaches and raise questions about long-term strategic planning throughout the supply chain.
KEY TAKEAWAYS:
NFDM production surged 11% to 154 million pounds while inventories climbed to 299.3 million pounds, up 41% year-over-year, creating a dangerous market imbalance
Italian cheese varieties outperformed American types, with mozzarella production up 3.6% while cheddar continued its 15-month decline.
Butter production increased merely 0.5% despite high component availability, as processors shifted cream to ice cream (+20.1%) and cultured products.
Whey protein concentrate production fell 10.4% while whey protein isolate jumped 19.9%, indicating a strategic shift toward higher-value proteins.
Regional production patterns show Western processors focused heavily on NFDM (+15.2%) while Central region facilities led in cheese (+1.8%)
Steam billows from dryers running at full capacity across America’s heartland, transforming rivers of milk into mountains of powder that increasingly threaten to overwhelm warehouse capacity. The USDA’s January 2025 Dairy Products report, released yesterday, exposes troubling misalignments between processor decisions and market realities. Manufacturers appear to be doubling down on precisely the wrong products while ignoring clear warning signals from domestic and international markets.
Cheese Production Reveals Contradictory Strategies
January cheese production data unveils a strategic repositioning that demands closer scrutiny from processors and farmers. Total cheese output reached 1.21 billion pounds, inching up a modest 0.8% from January 2024 despite component-adjusted milk production increasing 2.2% nationally. This restrained growth suggests processors remain cautious amid looming capacity expansions and uncertain demand signals.
Product
January 2025 (million lbs)
Change from January 2024
Change from Expected
Cheese (Total)
1,210.2
+0.8%
Below forecast
American-Style
473.9
+0.2%
Below forecast
Cheddar
326.1
-1.4%
Below forecast
Italian Types
521.7
+2.2%
Above forecast
Mozzarella
412.7
+3.6%
Above forecast
The most revealing aspect of January’s cheese data is the stark divergence between cheese categories. While American cheese production barely increased, at 0.2% above January 2024 levels, Italian varieties grew substantially stronger, at 2.2%. Mozzarella’s impressive 3.6% increase led this to 412.7 million pounds. This marks mozzarella’s third-highest January production, reflecting processors’ strategic pivot toward export-friendly and foodservice-oriented varieties.
Particularly concerning for farmers focused on American cheese components is cheddar’s continued decline, dropping 1.4% to 326.1 million pounds—marking the fifteenth consecutive month of year-over-year declines. While this represents a moderating decrease compared to previous months, the persistent weakness in a traditionally anchored U.S. dairy processing category raises fundamental questions about shifting consumer preferences and processor responses.
The Butterfat Allocation Mystery
The January report exposes a perplexing contradiction in butterfat utilization that demands explanation. How can butter production grow only 0.5% to 218.3 million pounds when component-adjusted milk production increased by 2.2% and butterfat yields reached near-record levels? The answer lies in a dramatic reallocation of fat to alternative product streams that offer processors better margins—but may ultimately undermine farm-level butterfat premiums.
Processors appear to redirect cream toward frozen and cultured products rather than churning butter, with ice cream production soaring 20.1% to 59.6 million gallons—the highest January level since 2016. Regular hard ice cream led the surge, but other categories followed: low-fat ice cream jumped 10.2%, frozen yogurt increased 14.1%, and cream cottage cheese production jumped 18%.
This strategic pivot coincides with concerning inventory accumulation. According to the USDA’s Cold Storage Report, butter stocks climbed to 270.2 million pounds by January 31st, representing a troubling 26% increase from December and 9% growth year over year. This inventory build-up during what should be the seasonal low point for butter stocks signals potential market imbalances that could eventually transmit back to farm-level component values.
Powder Markets: A Crisis in Waiting
The most alarming element of January’s report is the dangerous inventory accumulation in dry milk products. Despite already bloated warehouses, nonfat dry milk (NFDM) production accelerated sharply by 11.0% to 153.5 million pounds, creating what industry analysts increasingly call “a powder volcano ready to erupt.”
NFDM Inventory Metrics
January 2024
December 2024
January 2025
% Change (YoY)
End-of-Month Stocks (million lbs)
212.3
256.1
299.3
+41.0%
Monthly Production (million lbs)
138.3
130.7
153.5
+11.0%
Monthly Shipments (million lbs)
123.0
106.5
106.5
-13.4%
Production-to-Shipment Ratio
1.12
1.23
1.44
+28.6%
The 41% year-over-year inventory increase to 299.3 million pounds represents approximately 90 days of domestic consumption—far exceeding healthy balance levels. Even more troubling, NFDM shipments collapsed by 13.4% compared to January 2024, creating a perfect storm of overproduction and underconsumption.
“Processors appear to be ignoring flashing warning signs in the powder market,” warns industry economist Maria Rodriguez. “With flat or weakening demand from Mexico and reduced interest from other international buyers, these inventory levels create downward price pressure that will only intensify as we approach spring flush.”
This inventory mismanagement becomes more significant given imminent trade disruptions with Mexico, America’s largest dairy export destination. Adding to market pressures, the sharp decline in skim milk powder production (37.6% to 35.5 million pounds) indicates processors may be abandoning products specifically formulated for international markets just as trade tensions escalate—a concerning strategic pivot that could damage hard-won market relationships.
Whey Complex Shows Mixed Results
The whey sector presented contradictory signals in January that further highlight processor indecision. Total dry whey production decreased slightly by 1.9% to 76.2 million pounds compared to January 2024, despite increasing cheese production that would typically generate more whey. This suggests potential processing constraints or strategic decisions to limit whey production amid uncertain markets.
More notably, whey protein concentrate (WPC) production fell sharply by 10.4% to 38.2 million pounds, with the WPC 25.0-49.9% category plummeting 17.6%—reaching record low production levels for January. Despite this production decline, WPC stocks decreased marginally by 3.6%, suggesting weakening demand across domestic and international channels.
Conversely, whey protein isolate production increased substantially by 19.9% to 17.1 million pounds, suggesting manufacturers focus on higher-value protein products. Meanwhile, WPI stocks decreased 5.7%, indicating that demand for these specialized products remains relatively robust.
Product
Regional Change from January 2024
Atlantic
Cheese
-1.6%
NFDM
+4.1%
Dry Whey
-2.9%
Strategic Implications for Dairy Farmers
The January production data demand strategic responses from dairy producers facing these market dynamics. The disconnect between component-adjusted milk production increases (2.2%) and finished product growth rates suggests processors struggle to balance milk utilization against fragmented market signals efficiently. This challenge ultimately transmits financial risk back to the farm level.
Farmers should consider several proactive measures:
Review component optimization strategies, particularly evaluating the ROI on protein-enhancing feed additives, given the weakness in American cheese production and strength in Italian varieties.
Contact processors directly to understand their production plans during the upcoming spring flush period and align herd management accordingly.
Evaluate milk marketing contracts to determine flexibility for directing milk to processors with more diversified product portfolios that are less dependent on NFDM.
Implement voluntary production moderation during peak spring months to avoid contributing to already excessive powder inventory build-up.
Farmers must recognize that the traditional price signals from CME markets may be increasingly disconnected from actual product movement and inventory positions. The January report demonstrates that even as cheese and butter prices show relative strength on paper, the underlying supply-demand fundamentals suggest potential pricing corrections once inventory realities fully manifest in market prices.
Conclusion: Market Reality Check Needed
As the dairy industry navigates these complex production and trade dynamics, the approaching spring flush threatens to exacerbate already significant challenges. The traditional seasonal increase in milk production could trigger substantial price corrections unless processors realign production plans with market realities rather than continuing to build inventory positions that defy economic logic.
For dairy farmers, these production trends underscore the urgent need for greater transparency and coordination across the supply chain. The divergence between component-adjusted milk production increases and finished product growth rates suggests a processing sector struggling to allocate milk components efficiently against fluctuating demand signals. This challenge ultimately transmits financial risk back to those producing the milk.
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U.S. milk production edges up 0.1% despite HPAI headwinds as Texas & Idaho surge 6%+, But California struggles (-5.7%) amid outbreaks. Canada tariffs PAUSED until March 4—exporters pivot to Asia. Butter defies glut, up 3.75¢.
Summary:
The U.S. dairy sector demonstrated resilience in February 2025, with milk production edging up 0.1% year-over-year to 19.1 billion pounds, driven by a 41,000-head herd expansion and robust growth in Texas (+6.5%) and Idaho (+6.4%). California’s output, however, fell 5.7% due to persistent HPAI outbreaks affecting 747 herds. Global markets saw mixed trends, with Argentina and New Zealand posting substantial early-year gains, while the Global Dairy Trade Index dipped 0.6% amid sluggish demand for skim milk powder and cheese. A temporary pause in U.S.-Canada tariffs until March 4 provided exporters breathing room, though uncertainty loomed as prices fluctuated—butter rose 3.75¢ to $2.415/lb despite oversupply, while cheese and nonfat dry milk declined. Labor costs, environmental regulations, and trade tensions with Mexico remain key challenges, but strategic shifts toward automation, biosecurity, and Southeast Asian markets aim to bolster sector stability. Stakeholders are advised to hedge margins and diversify exports to navigate 2025’s volatility.
Key Takeaways:
U.S. Production Growth: In January 2025, milk output rose 0.1% YoY to 19.1B lbs, driven by Texas (+6.5%) and Idaho (+6.4%) herd expansions. California lagged (-5.7%) due to HPAI outbreaks (747 herds affected).
Global Trends Mixed: Argentina (+5.6%) and New Zealand (+5% milk solids) surged, but the GDT Index fell 0.6% due to weak skim milk powder (-2.5%) and cheese demand.
Tariff Pause Relief: The 25% U.S.-Canada dairy tariffs were paused until March 4, and 18% of exports were rerouted to Asia. Mexico threatened retaliation on $1.13B in cheese imports.
Commodity Volatility: Butter rose 3.75¢ to $2.415/lb despite oversupply; cheese blocks fell to $1.90/lb. NDM slumped to $1.24/lb (-4¢).
HPAI Strains Circulating: Two variants (B3.13 and D1.1) impact herds; 40% recover within 60 days.
Strategic Shifts: Redirect exports to Southeast Asia (+9% demand); hedge 40–60% of Q2 milk via futures.
The U.S. dairy sector is showing tentative signs of recovery, with January 2025 milk production rising 0.1% year-over-year to 19.1 billion pounds despite ongoing challenges from avian influenza (HPAI) and trade disputes. Regional disparities remain stark: Texas and Idaho saw output surge over 6%, while California’s production slumped 5.7% due to HPAI outbreaks. Meanwhile, a temporary pause in U.S.-Canada dairy tariffs offers breathing room for exporters, though uncertainty looms ahead of a March 4 negotiation deadline.
U.S. Production: Growth Amidst Regional Disparities
The USDA’s latest Milk Production Report reveals a dairy herd of 9.365 million head in January 2025, up 41,000 cows year-over-year. Texas led the expansion, adding 40,000 cows to drive a 6.5% production jump, while Idaho’s output grew 6.4%. However, California’s struggles persist, with 747 herds affected by HPAI (Highly Pathogenic Avian Influenza) and production down 5.7% year-over-year.
Dr. Lucas Fuess, RaboResearch Dairy Analyst: “Producers are walking a tightrope—expanding herds where possible while managing HPAI risks. Texas and Idaho’s growth is impressive, but California’s woes remind us how quickly disease can destabilize regional markets.”
Milk per cow dipped slightly to 2,054 pounds in January (-0.4% YoY), though higher butterfat and protein levels partially offset volume declines. Component-driven processing remains critical as cheese and butter manufacturers adapt to shifting milk composition.
State
Jan 2025 Production (Billion lbs)
YoY Change
Milk/Cow (lbs)
Herd Size (1,000 head)
Texas
1.42
+6.5%
2,150
680
Idaho
1.38
+6.4%
2,110
655
California
3.21
-5.7%
1,980
1,620
24 States
18.3
+0.2%
2,054
8,920
Source: USDA Milk Production Report (Feb 21, 2025)
Global Markets: Stagnant Supply, Strategic Stockpiling
Global milk production among major exporters was virtually flat in 2024 (-0.1%), but early 2025 data hints at recovery. Argentina’s output rose 5.6% in January, while New Zealand milk solids climbed 5% year-over-year. However, the Global Dairy Trade (GDT) Price Index fell 0.6% this week, with skim milk powder (-2.5%) and cheese prices leading declines.
Key Trade Developments:
U.S.-Canada Tariff Pause: The 25% retaliatory tariffs on $1.2B in annual dairy trade are suspended until March 4, 2025. During the pause, U.S. exporters rerouted 18% of Canada-bound shipments to Southeast Asia and the Middle East.
Mexico’s Warning: If the Canada dispute escalates, Mexico threatens retaliatory tariffs on $1.13B in U.S. cheese imports.
Michael Dykes, IDFA President: “This tariff pause gives both nations time to realign priorities. But long-term solutions are needed—dairy can’t thrive under constant trade whiplash.”
U.S. butterfat remains oversupplied due to intense component levels and seasonal inventory builds. However, new American-style cheese plants (slated to open in Q2) could absorb excess fat.
HPAI: Two Strains, Uneven Recovery
The CDC confirms two HPAI strains circulating in U.S. herds: B3.13 (dominant in 2023–2024) and D1.1 (first detected in Nevada). California remains the hardest-hit state, with 297 herds recovered and 450 still under quarantine.
Impact on Production:
Infected cows experience 10–20% milk loss for 2–3 weeks.
40% of affected herds resume expected output within 60 days.
Dr. Amy Swinford, Texas A&M Veterinary Lab: “D1.1 appears more virulent but less transmissible. Biosecurity upgrades—like foot baths and rodent control—are reducing spread in proactive herds.”
Labor and Regulation: Cost Pressures Mount
Labor Costs: Up 6.2% YoY, driving robotics adoption (35% of large farms now use automated milkers).
California’s SB 1383 requires dairies to cut methane emissions by 40% by 2030, spurring digester installations.
Paul Bleiberg, NMPF SVP: “Between labor shortages and environmental rules, producers need policy stability—not new hurdles.”
Bullvine Daily is your essential e-zine for staying ahead in the dairy industry. With over 30,000 subscribers, we bring you the week’s top news, helping you manage tasks efficiently. Stay informed about milk production, tech adoption, and more, so you can concentrate on your dairy operations.
Global dairy markets face mixed trends this week: cheese prices rise while butter and powders soften. U.S. milk surpluses clash with weather-hit Northeast production, and trade tensions loom with new tariffs. Discover key insights, market forecasts, and growth opportunities in our full report!
Summary:
Navigate the complex global dairy market, where cheese prices rise as butter and powder costs fall, reflecting U.S. surplus and weather-affected Northeast production. Trade tensions with new tariffs add to the challenge. Looking ahead, explore how US milk production is projected to hit 227.2 billion pounds while the global dairy market is expected to soar from $649.9 billion in 2025 to $813.6 billion by 2030. Consumer trends are shifting towards healthier dairy options, offering room for innovation. For stakeholders, the key is to manage supply imbalances, evolve with trade dynamics, and adapt to consumer preferences in this unpredictable landscape.
Key Takeaways:
Cheese prices have seen an increase while prices for butter and powders have softened.
The U.S. is experiencing milk surpluses, which are impacting the dairy market’s dynamics.
Weather challenges have affected milk production in the Northeast, influencing regional supply.
New tariffs have raised concerns over potential trade tensions impacting dairy exports and imports.
The report offers market forecasts and identifies growth opportunities within the dairy sector.
Enrichment strategies can improve cattle behavior, contributing positively to the farm environment.
1. Key Developments
Milk Price Adjustment: The Canadian Dairy Commission announced a slight decrease of 0.0237% in the Farmgate milk price for 2025, effective February 1.
Production Forecast: The USDA revised its 2025 milk production forecast to 227.2 billion pounds, driven by higher cow numbers and milk yields.
Global Supply Growth: RaboResearch projects an 0.8% increase in milk supply from major exporting regions in 2025, with all key areas expected to see gains for the first time since 2020.
Trade Dynamics: New trade actions, including increased steel and aluminum tariffs, may affect U.S. dairy exports, which are crucial for the cheese market.
Farm Income Rebound: USDA projects a significant increase in net farm income for 2025, primarily driven by disaster and economic government assistance.
2. Executive Summary
Key market trends:
Mixed price movements across dairy commodities, with cheese showing resilience while other products face downward pressure.
Regional disparities in milk production, with surplus conditions in some areas contrasting with weather-related challenges in others.
Projected global milk supply growth for 2025, albeit with potential regional variations.
Critical industry challenges:
Manage milk surpluses in certain regions while addressing shortages in others.
Navigated the potential impact of new trade tariffs on dairy exports.
Adapting to changing consumer preferences and price sensitivities.
Opportunities:
Leveraging projected global supply growth to expand market share in key export markets.
Innovating to meet evolving consumer demands for health-conscious and sustainable dairy products.
Optimize production efficiency to manage costs due to potential feed price fluctuations.
Key takeaways for stakeholders:
Monitor trade policy developments closely and prepare contingency plans for potential export disruptions.
Focus on efficiency and cost management to maintain profitability amid price volatility.
Invest in product innovation to capture emerging market opportunities and meet changing consumer preferences.
Stay informed about regional production trends to identify potential supply-demand imbalances and market opportunities.
Consider hedging strategies to mitigate risks associated with price volatility in both dairy and feed markets.
3. Futures Market Overview
EEX Futures: Total volume traded for the week: 1,235 contracts Breakdown by-product:
Butter: 485 contracts
Skimmed Milk Powder (SMP): 750 contracts
Price trends:
Butter futures showed a slight downward trend, with the February 2025 contract closing at €5,565/tonne.
SMP futures remained relatively stable, with the February 2025 contract ending at €2,484/tonne.
SGX Futures: Total volume traded: 890 contracts Breakdown by-product:
Class III milk futures for February 2025 settled at $20.21/cwt, while Class IV milk futures concluded at $19.85/cwt.
Implications for dairy farmers and processors: Future market activity suggests a cautiously optimistic outlook for dairy prices in the short term. The stability in SMP futures across EEX and SGX platforms indicates a balanced global market for milk powders. However, the slight downward trend in EEX butter futures may signal potential pressure on butterfat values in the European market.
4. Spot Market Indicators
CME Cash Dairy Product Prices (as of February 11, 2025):
Butter: $2.4050/lb, down from $2.4100/lb the previous week
Cheddar Block: $1.9050/lb, up from $1.8685/lb the previous week
Cheddar Barrel: $1.8163/lb, up from $1.7970/lb the previous week
NDM Grade A: $1.3125/lb, down from $1.3380/lb the previous week
Dry Whey: $0.5775/lb, down from $0.6055/lb the previous week
These spot market indicators reflect a complex supply and demand dynamic in the global dairy market. The slight increase in cheese prices and the decline in butter and powder prices suggest a value rebalancing of milk components.
5. Regional Production and Demand
United States:
Overall milk production is growing, with the USDA revising its 2025 forecast to 227.2 billion pounds.
Regional disparities are evident, with the Midwest experiencing surplus milk conditions while the Northeast faces challenges from harsh winter weather.
European Union:
Milk production is expected to grow slightly in 2025, with variations across member states.
New Zealand:
Milk production forecast for the 2024-2025 season has been adjusted downward by 2% due to dry conditions.
China:
Projected 2% year-on-year growth in dairy import volumes for 2025, reversing a three-year decline.
Global Milk Production Forecast
Country/Region
2024 Expected (Billion Pounds)
2025 Forecast (Billion Pounds)
Change
Argentina
23.6
24.7
1.1
Australia
19.2
19.4
0.2
European Union
320.9
320.3
-0.6
New Zealand
47.6
48.1
0.5
Major Exporter Total
411.3
412.5
1.2
Source: USDA, Economic Research Service calculations based on USDA, Foreign Agricultural Service. Dairy: World Markets and Trade Report, December 2024.
This table illustrates the expected changes in milk production across major dairy-exporting regions. The slight decrease forecast for the European Union is notable, contrasting with increases in the other areas. The overall rise in major exporter production aligns with the global supply growth trend in the report.
6. Consumer Trends and Market Dynamics
Increased demand for functional dairy products, such as probiotic yogurts and fortified milk.
Growing interest in low-fat and reduced-sugar dairy options.
Rise in demand for organic and grass-fed dairy products.
Continued growth in on-the-go dairy snacks and single-serve portions.
Global Dairy Market Overview
The global dairy market continues to show strong growth potential, as illustrated by the following projections:
Global Dairy Market Size and Growth Projections
Year
Market Size (Billion USD)
CAGR
2025
649.9
–
2030 (Projected)
813.6
4.60%
Source: Mordor Intelligence Industry Report, 2025
This table demonstrates the expected growth in the global dairy market size from 2025 to 2030. With a projected CAGR of 4.60%, the market is anticipated to reach $813.6 billion by 2030, up from $649.9 billion in 2025. This growth trajectory underscores the ongoing opportunities in the dairy sector despite challenges such as changing consumer preferences and sustainability concerns.
7. Trade Dynamics
New trade actions announced, including increased steel and aluminum tariffs, potentially affecting U.S. trade relationships and the dairy export sector.
U.S. dairy exports will remain at $8.2 billion in 2024 despite recent trade tensions.
Shift in New Zealand’s exports from milk powder to high-value dairy products such as cheese, butter, and infant formula.
8. Farm Economics and Input Costs
The milk-feed price ratio for February 2025 is 2.15, hovering just below the 2.20 level deemed necessary for sustainable dairy herd growth.
Feed costs have eased, with purchased feed costs decreasing by 12.3%, according to the Canadian Dairy Commission.
USDA projects a significant increase in net farm income for 2025, primarily driven by disaster and economic government assistance.
9. Future Outlook
The all-milk price forecast for 2025 is $23.05 per hundred weight, $0.50 higher than last month’s forecast.
Global milk supply is expected to grow by 0.8% in 2025, with all significant exporting regions expecting gains for the first time since 2020.
Ongoing challenges include evolving trade relations, fluctuating prices, and global agricultural supply changes.
Bullvine Daily is your essential e-zine for staying ahead in the dairy industry. With over 30,000 subscribers, we bring you the week’s top news, helping you manage tasks efficiently. Stay informed about milk production, tech adoption, and more, so you can concentrate on your dairy operations.
Love is in the air, but so are rising food costs! As Valentine’s Day approaches, dairy farmers face a rollercoaster of challenges. Our latest market report dishes out the creamy (and sometimes sour) details, from price hikes to trade tensions and surprising milk surpluses to agricultural curveballs.
Summary:
In this week’s market report, rising grocery prices add to Valentine’s Day expenses while new trade actions threaten dairy exports, which are crucial for the cheese market. Cheddar prices show resilience despite these challenges, but other dairy products like dry whey and nonfat dry milk are declining. While milk supply increases, harsh weather tests eastern producers. Global trends show a slight drop in skim milk powder prices. Reduced South American agriculture forecasts could raise feed costs, impacting dairy farmers. Industry stakeholders must stay alert to evolving market dynamics and policy changes in these changing conditions.
Key Takeaways:
Grocery prices increased by 0.5% in January, with restaurant prices seeing a smaller rise of 0.2%, impacting Valentine’s Day celebrations at home.
New trade actions announced, including increased steel and aluminum tariffs, potentially affecting U.S. trade relationships and the dairy export sector.
The cheese market showed resilience despite looming trade disputes, with CME spot market prices for Cheddar blocks and barrels gaining during the week.
Mixed trends in other dairy products: dry whey and nonfat dry milk prices dropped, while butter prices fell slightly to the lowest since mid-2023.
Domestic butter demand remains strong, but abundant cream supplies could keep the market well-supplied in the foreseeable future.
Agricultural outlook highlights significant production cuts for corn and soybeans in South America, potentially affecting future feed costs for dairy farmers.
The dairy industry faces key challenges, including evolving trade relations, fluctuating prices, and global agricultural supply changes.
Ah, Valentine’s Day… a time for love, romance, and… emptying our wallets? Indeed, you heard correctly. While Cupid’s been busy shooting arrows, inflation has sneaked up on us like a ninja at night. Just the other day, I was chatting with my buddy Mike about our V-Day plans. He’s all set for a fancy home-cooked meal with his girlfriend, but I couldn’t help but wonder – is he in for a shock when he hits the grocery store?
According to the Bureau of Labor Statistics’s number crunchers (bless their hearts), grocery prices jumped 0.5% in January. While I’m not a math expert, these price increases could affect your finances. What about dining out, you ask? Well, here’s some good news – restaurant prices only increased by 0.2% last month. Not too shabby, right? Wait a moment, though. Before you start planning that five-course extravaganza, keep in mind that those menu prices are still a whopping 3.4% higher than they were this time last year. Ouch!
So, what’s a love-struck couple to do? Cook at home and risk breaking the bank, or dine out and potentially need a second mortgage? It’s a puzzling dilemma that requires careful consideration. Maybe we should all agree to celebrate Valentine’s Day in March when prices might (fingers crossed) be a bit more wallet-friendly. Or better yet, why not skip the fancy dinner and go for a romantic walk in the park? Last time I checked, Mother Nature wasn’t charging admission!
Trade Tensions Heat Up
Buckle up, folks! We’re in for a wild ride on the trade rollercoaster. The Trump administration dropped a bombshell on February 10th, getting everyone from Wall Street to Main Street talking. So, what’s the deal? Well, imagine you’re playing a game of economic chess, and suddenly, the rules change. That’s pretty much what happened this week.
The White House slapped a 25% tariff on steel and aluminum imports, effective March 15th.
Even our buddies up north in Canada and across the pond in the EU aren’t getting a free pass anymore.
They’re also cooking up “reciprocal tariffs” – it’s like saying, “If you punch me, I’ll punch you back just as hard.”
For the next month and a half, until March 31st, the Office of Management and Budget’s number crunchers will burn the midnight oil, scrutinizing every trade relationship.
Cheese, Please!
You might be thinking, “What’s this got to do with my cheese plate?” Well, here’s where it gets interesting. Our dairy farmers have been increasingly relying on selling their stuff overseas. They’ve been using exports as a pressure release valve for all that extra milk and cheese we’re not gobbling up here at home.
Get this – in 2024, Americans ate 17.3 million pounds less cheese (I know, hard to believe, right?). But don’t worry about our hardworking dairy farmers just yet. They managed to ship out a whopping 170.2 million extra pounds to other countries! Talk about turning lemons into lemonade… or should I say, turning milk into exported cheese?
Dairy Product Performance
Despite looming trade concerns, the cheese market showed some resilience:
Product
Current Avg. ($/lb)
Prior Week Avg. ($/lb)
Weekly Volume
Butter
2.4050
2.4100
12
Cheddar Block
1.9050
1.8685
6
Cheddar Barrel
1.8163
1.7970
5
NDM Grade A
1.3125
1.3380
15
Dry Whey
0.5775
0.6055
2
CME spot market: Cheddar blocks gained 6¢, ending at $1.92/lb on February 14th.
Barrels increased to $1.8175/lb, a 3.75¢ increase from last week.
Dry whey continued its downward trend, ending at 55¢ per pound.
Nonfat dry milk (NDM) hit $1.28/lb, its lowest since August 2024.
Butter settled at $2.3775/lb, the lowest price since June 2023.
It’s funny how things change in the dairy world. Just the other day, I was chatting with my buddy Joe, who runs a small cheese plant in Wisconsin. He was telling me how he’s been swimming in milk lately. Can you believe it? Midwest manufacturers are snagging milk at prices lower than Class III for the first time since we rang in the new year. It’s like finding designer jeans in the bargain bin!
But here’s the kicker – it’s not just a Midwest thing. Seems like cows across the country have been in overdrive, pumping out milk like there’s no tomorrow. I mean, who knew bovines could be such overachievers, right?
Region
Milk Production (million lbs)
Change from Last Year
Midwest
5,250
+2.3%
Northeast
3,780
+1.5%
West
4,920
+0.8%
Southeast
1,650
-1.2%
Hold your horses before you start picturing milk rivers flowing through the streets. Our friends out East aren’t exactly having a milk party. Mother nature’s been throwing a fit, with winter storms making life challenging for those poor farmers.
Agricultural Outlook: Curveballs and Conundrums
The USDA’s World Agricultural Supply and Demand Estimates report, released on February 8th, threw us some curveballs:
Corn production in Argentina and Brazil: down 1 million metric tons each.
Argentina’s soybean production estimate: lowered to 49 MMT, a 3 MMT drop.
You’d think dairy farmers would be breathing a sigh of relief with these production cuts, right? Well, not so fast! Despite all the hullabaloo, soybean futures took a nosedive on Tuesday and Wednesday (February 12th and 13th). Go figure!
Wrapping It Up: The Dairy Dilemma
So, what’s a dairy farmer to do? Keep their eyes peeled, ears to the ground, and maybe invest in a crystal ball while they’re at it. Because in this topsy-turvy dairy world, the only thing we can be sure of is that nothing’s for sure!
As we head into the rest of February and beyond, the dairy industry faces a complex web of challenges. From Valentine’s Day price hikes to international trade tensions, and from regional production disparities to unpredictable agricultural forecasts, it’s clear that dairy farmers and industry stakeholders will need to stay on their toes.
But hey, if there’s one thing I’ve learned from watching this industry, it’s that our dairy farmers are nothing if not resilient. They’ve weathered storms before (both literal and figurative), and they’ll do it again. So the next time you’re enjoying a slice of cheese or a scoop of ice cream, raise a glass (of milk, of course) to the hardworking folks who make it all possible. They’re the real MVPs of the dairy world, come rain or shine, tariff or no tariff.
Bullvine Daily is your essential e-zine for staying ahead in the dairy industry. With over 30,000 subscribers, we bring you the week’s top news, helping you manage tasks efficiently. Stay informed about milk production, tech adoption, and more, so you can concentrate on your dairy operations.
Dairy markets swing wildly as trade tensions boil over. The March Class III contract lurched more than a dollar in a single day, leaving farmers scrambling. With U.S. tariffs rising and China retaliating, the global dairy landscape faces an economic battle. Who will emerge victorious in this high-stakes game of dairy dominance?
Summary:
The global dairy market is facing challenges due to trade tensions and changes in production. In February 2025, there was significant activity, with EEX futures trading 2,100 tonnes of dairy products. Butter futures decreased while SMP futures went up. The Global Dairy Trade auction index increased by 3.7%. Regionally, Ireland and Poland saw strong milk production growth, while milk prices in China increased slightly after a long decline. In the U.S., trade issues impacted milk powder exports, but cheese exports to Mexico did well. With mixed results worldwide, dairy farmers must focus on being efficient and adaptable to navigate these changing market conditions.
Key Takeaways:
Global milk supply forecasted to grow by 0.8% in 2025, with all significant exporting regions expecting gains for the first time since 2020.
Trade tensions between the U.S. and Canada may disrupt established trade flows, influencing global dairy markets.
EU milk production shows recovery, but an overall decline is expected due to environmental and regulatory challenges.
U.S. dairy exports are mixed, with cheese exports booming despite a sharp decline in milk powder production.
China’s dairy market stabilizes, with import growth projected and farmgate milk prices rising for the first time in over two years.
Fluctuating prices and shifting production patterns reshape the global dairy landscape, presenting challenges and opportunities.
Dairy farmers are encouraged to adopt risk management, explore value-added products, and leverage emerging markets for growth.
Emphasis on efficiency and adaptability is crucial for dairy farmers to thrive in a dynamic and evolving market environment.
During a volatile week in the financial markets, dairy market prices fluctuated significantly due to escalating trade tensions. The March Class III contract swung more than a dollar in a single day, causing farmers and traders to react quickly to the rapid price changes. As the U.S. ratchets tariffs and China retaliates with precision strikes, the global dairy landscape finds itself caught in an escalating economic battle. Recent data from key exchanges and industry reports reveal a sector teetering between opportunity and crisis – but who will emerge victorious in this high-stakes game of global dairy dominance? As exports increase, production changes, and consumer preferences evolve, dairy farmers worldwide deal with a highly dynamic market. Will they adapt swiftly to seize new opportunities or falter under the pressures of volatility?
Market Dynamics
Global milk production is forecasted to rise by 0.8% in 2025, driven by technological advancements, shifting consumer preferences, and improved farming practices across major exporting regions, marking the first simultaneous growth since 2020. This increase is influenced by higher prices paid to farmers for milk, lower costs for animal feed, and better weather conditions, indicating a possible positive change for the global dairy sector. This growth is driven by increased profitability for dairy farmers. Additionally, more affordable feed costs and favorable weather patterns support higher yields.
Although there are positive expectations, the dairy market continues to be unstable for various reasons. A substantial increase in dairy processing capacity, particularly in the United States, is expected to reshape regional milk markets. China’s projected 2% year-on-year increase in dairy imports for 2025 could significantly impact global trade flows and prices. Additionally, ongoing trade disputes, especially between the United States and Canada, threaten to disrupt established trade patterns.
Combining these factors results in a complicated and ever-changing global market landscape for dairy farmers and processors. Consumer demand fluctuations, driven by economic pressures and changing preferences, influence the market. While feed costs are currently favorable, they remain subject to fluctuations in the global commodity market. As the industry navigates these challenges and opportunities, adaptability and strategic planning will be crucial for success in the evolving global dairy landscape 2025.
Country/Region
2024 Expected (Billion Pounds)
2025 Forecast (Billion Pounds)
Change
Argentina
23.6
24.7
1.1
Australia
19.2
19.4
0.2
European Union
320.9
320.3
-0.6
New Zealand
47.6
48.1
0.5
Major Exporter Total
411.3
412.5
1.2
Source: USDA, Economic Research Service calculations based on USDA, Foreign Agricultural Service. Dairy: World Markets and Trade Report, December 2024.
Regional Production Trends
European Union
In 2025, the European Union’s dairy industry shows varied trends among its member countries. While some countries show promising growth, EU milk production is forecast to decline marginally.
Ireland stands out with a remarkable 30.1% year-over-year increase in December collections, showcasing the country’s strong recovery and efficient dairy farming practices. This surge is attributed to favorable weather conditions, improved feed quality, and strategic investments in dairy infrastructure. Poland and Spain also posted gains, with solid milk production up by 3.4% and 0.7% respectively in December. Poland’s growth is driven by ongoing consolidation in the dairy sector and investments in modern farming technologies. Spain’s modest increase reflects a gradual recovery from past obstacles, including economic downturns and supply chain disruptions, showcasing the industry’s resilience and adaptive strategies.
Despite these positive indicators, the EU as a whole faces headwinds. It is predicted that milk output will slightly decrease to 149.4 million metric tons (MMT) in 2025, a drop from 149.6 MMT in 2024. This decline is attributed to several factors:
Declining cow numbers: Stricter environmental regulations and farm consolidation are reducing overall herd sizes across the EU.
Tight farmer margins: Rising input costs, particularly for feed and energy, are squeezing profitability for many dairy farmers.
Environmental regulations: The EU’s Green Deal and Farm to Fork strategy impose stricter sustainability requirements, forcing some farmers to reduce production or exit the industry.
Disease outbreaks: Concerns about diseases like bluetongue in some regions are impacting production and trade.
The European dairy industry is also experiencing a shift in product focus. Cheese manufacturing is set to be a primary focus due to high local and international demand. This focus on cheese may come at the expense of butter, non-fat dry milk, and whole milk powder production.
Looking ahead, the EU dairy sector must balance environmental sustainability with economic viability. Innovations in feed efficiency, animal welfare, and sustainable farming practices will be crucial for maintaining the EU’s position in the global dairy market.
United States
In 2025, the U.S. dairy industry grapples with diverse challenges, including labor shortages and environmental regulations, alongside promising prospects such as export market growth and technological advancements. While milk production shows signs of growth, there are significant variations across product categories and regions.
Cheese production experienced a dip of 0.7% year-over-year in December, totaling 1.2 billion pounds. This decrease is primarily attributed to shifts in consumer demand and increased competition from plant-based alternatives. However, the export market tells a different story, with cheese shipments surging by 21% compared to December 2023. This export boom is driven by strong demand from key markets like Mexico and South Korea and favorable exchange rates.
Regional variations in milk production are becoming more pronounced. Texas and Idaho are leading the charge, with production increases of 7.5% and 3.5%, respectively. These states benefit from:
Large-scale, efficient dairy operations
Favorable climate conditions for year-round production
Strategic investments in processing capacity
Other major dairy states also see increased milk production, albeit at more modest rates. Factors contributing to this growth include:
Improved cow genetics, leading to higher per-cow yields
Adopt advanced technologies like robotic milking systems
Optimized feed management practices
However, challenges remain for the U.S. dairy sector:
Labor shortages continue to impact farm operations and processing facilities
Environmental regulations, particularly regarding methane emissions, are becoming more stringent
Volatility in feed costs affects profitability
The USDA forecasts overall U.S. milk production to reach 227.2 billion pounds in 2025, slightly lower than previous estimates due to decreased milk per cow yields and adjustments in dairy cow inventories, signaling potential challenges for the industry.
Adaptability and innovation will be key as the U.S. dairy industry navigates these complex dynamics. Farmers and processors are likely to focus on:
Diversifying product offerings to meet changing consumer preferences
Investing in sustainability initiatives to meet regulatory requirements and consumer expectations
Explore new export markets to capitalize on strong global demand
Oceania
The Oceania region, particularly New Zealand, plays a crucial role in the global dairy market. The strong participation in the latest Global Dairy Trade (GDT) event, with 182 bidders competing for 23,854 tonnes of product, underscores the region’s importance in setting global dairy price trends.
New Zealand‘s dairy sector is anticipating significant seasonal peaks in production for 2025.
Favorable weather conditions: La Niña weather patterns are expected to bring adequate rainfall, supporting pasture growth.
Herd management improvements: Farmers focus on breeding programs and animal health to increase per-cow productivity.
Environmental regulations: New Zealand’s government is implementing stricter environmental policies, which may impact production practices.
Land use competition: Increasing pressure from alternative land uses, such as forestry and horticulture, could limit dairy expansion.
Labor shortages: Like many countries, New Zealand is grappling with agricultural labor shortages.
Australia, the other major player in Oceania’s dairy sector, is expected to see modest growth in milk production. The country is recovering from previous droughts and focusing on rebuilding its dairy herd.
Both countries will likely benefit from strong global demand, particularly from Asian markets. However, they must navigate changing consumer preferences, especially the growing demand for plant-based alternatives.
China
China, the world’s largest dairy importer, shows signs of market stabilization, with potential significant impacts on global dairy trade. Farmgate milk prices in January increased for the first time in 27 months, signaling a possible turning point in the country’s dairy sector.
However, at 3.12 Yuan/Kg, prices remain 14.5% below year-ago levels, indicating ongoing challenges for domestic producers. This price pressure has led to:
Consolidation in the dairy farming sector, with smaller farms exiting the market
Increased focus on efficiency and productivity among more extensive operations
Government initiatives to support the domestic dairy industry
In 2025, China’s milk production will fall by 1.5% year-on-year. This decline is attributed to:
Shift towards more extensive, more efficient dairy operations
Despite the projected decrease in domestic production, China’s dairy market remains dynamic:
Consumer demand for dairy products continues to grow, particularly in urban areas
The government is promoting increased dairy consumption for nutritional benefits
E-commerce and innovative dairy products are expanding market reach
China’s dairy imports are projected to grow by 2% year-on-year in 2025, ending a three-year decline. This increase could significantly impact global dairy trade flows and prices.
Key factors to watch in China’s dairy sector include:
Government policies supporting domestic production vs. import reliance
Changing consumer preferences, especially among younger demographics
Developments in China’s trade relationships with major dairy exporting countries
As China’s dairy landscape evolves, it will play a pivotal role in shaping global dairy markets, influencing everything from commodity prices to product innovation.
Trade Tensions and Market Volatility
The dairy industry is central to a complex web of international trade disputes, with recent developments creating significant market uncertainty. The U.S., Mexico, and Canada have agreed to a 30-day détente, temporarily easing tensions in North American trade relations. This short-term truce is aimed at addressing shared concerns over drug trafficking across borders, highlighting the interconnected nature of trade and broader geopolitical issues.
However, escalating trade conflicts with China overshadow the respite in North American tensions. The U.S. has implemented a sweeping 10% tariff increase on Chinese imports, which has prompted swift retaliation from Beijing. China’s response, characterized by targeted sanctions, demonstrates a strategic approach to economic warfare, potentially impacting specific sectors of the U.S. economy while minimizing domestic economic disruption.
The ripple effects of these trade tensions are already evident in the dairy market. U.S. milk powder exporters, traditionally reliant on robust international demand, are adopting a cautious stance. The USDA’s Dairy Market News reports that Mexican demand for U.S. milk powder has become “subdued,” a concerning development given Mexico’s status as a key market for U.S. dairy exports. In 2024, Mexico imported approximately 576,000 metric tons of U.S. dairy products, making it the largest export destination for American dairy.
This hesitancy extends beyond international buyers, with domestic purchasers also showing reluctance. Market analysts note a “chilling effect” on U.S. buyers, who are wary of committing to purchases in such an unpredictable environment. This cautious approach is encapsulated in the industry phrase of avoiding “catching the proverbial falling knife,” reflecting fears of buying into a declining market.
These trade conflicts affect more than just milk powder; they extend to other dairy products. The dairy commodity spectrum, including cheese, butter, and whey products, faces potential disruption. For instance, U.S. cheese exports to Mexico, which saw a 36% year-over-year increase in August 2024, could be at risk if current trade uncertainties persist or escalate.
Looking ahead, the industry faces several critical junctures that could further shape market dynamics:
The conclusion of the 30-day North American détente could lead to a more stable trading environment or a return to heightened tensions.
Potential expansion of Chinese tariffs to include key dairy products like whey, which have so far been spared but remain vulnerable.
The upcoming 2026 review of the U.S.-Mexico-Canada Agreement (USMCA) could reshape the North American dairy trade for years.
In this volatile climate, dairy producers and exporters must remain agile, ready to adapt to rapidly changing market conditions. Diversification of export markets, exploration of value-added product lines, and close monitoring of international trade policies will be crucial strategies for navigating these turbulent waters.
Production Shifts and Export Trends
The U.S. dairy industry is experiencing significant shifts in production patterns and export trends, with notable divergences between milk powder and cheese sectors.
Milk Powder Production Decline
U.S. milk powder output has substantially declined, with December production 15% lower than the prior year. This trend extends beyond a month, as 2024 milk powder production slumped 13% to reach the lowest annual total since 2013. Several factors contribute to this decline:
Shifting consumer preferences: Domestic consumers increasingly opt for alternative dairy products, reducing demand for traditional milk powder.
Processing capacity reallocation: Many processors have shifted their focus to higher-value products like cheese and specialty ingredients, reducing capacity dedicated to milk powder production.
Feed cost fluctuations: Rising feed costs have impacted milk production, with some farmers reducing herd sizes or shifting to alternative feed strategies.
Environmental regulations: Stricter environmental policies in some states have reduced dairy herd sizes, impacting milk availability for powder production.
Booming Cheese Exports
U.S. cheese exports are experiencing unprecedented growth compared to the milk powder sector. The U.S. exported 97 million pounds of cheese in December, marking a 21% increase compared to December 2023. This export surge has led to a record-breaking utilization of domestic production, with exports accounting for 8% of U.S. cheese production in 2024. Key drivers of this cheese export boom include:
Competitive pricing: U.S. cheese prices have become more competitive globally, attracting international buyers.
Product diversification: American cheesemakers have expanded their product range, catering to diverse international tastes and preferences.
Quality improvements: Investments in cheese-making technology and processes have enhanced the quality and consistency of U.S. cheese, making it more appealing to foreign markets.
Trade agreements: Favorable trade agreements, particularly with Mexico and South Korea, have facilitated increased cheese exports.
Marketing efforts: Aggressive marketing campaigns by U.S. dairy organizations have successfully promoted American cheese in key international markets.
Market Implications
These contrasting trends in milk powder production and cheese exports have significant implications for the U.S. dairy industry:
Processor strategy shifts: More processors may pivot towards cheese production, given the strong export demand and higher profit margins than milk powder.
Farm-level impacts: Dairy farmers may need to adjust their production strategies to meet the changing demand, potentially focusing on milk composition that favors cheese production.
Global market positioning: The U.S. is strengthening as a significant cheese exporter while potentially ceding ground in the global milk powder market.
Supply chain adaptations: U.S. dairy exports’ logistics and supply chain are likely to evolve, with increased focus on cheese transportation and storage.
As these trends unfold, the U.S. dairy industry must remain agile, adapting to changing global demand patterns and market opportunities. The contrasting fortunes of milk powder and cheese sectors underscore the importance of diversification and market responsiveness in the dynamic global dairy trade landscape.
Price Movements and Future Outlook
Year
All-Milk Price Forecast (USD/cwt)
2025
23.05
2026
19.00
2027
19.10
2028
19.30
2029
19.50
2030
19.70
Source: USDA, Economic Research Service
The dairy market is experiencing significant price fluctuations across various products, reflecting the complex interplay of supply, demand, and global trade dynamics.
CME Spot Market Trends:
The CME spot nonfat dry milk (NDM) fell 1.5¢ to $1.33 per pound, reaching its lowest point since August. This decline suggests an oversupply in the milk powder market, potentially due to weakened export demand or increased domestic production. The drop in NDM prices could impact Class IV milk prices, as NDM is a key component.
Similarly, CME spot Cheddar blocks also decreased, falling 1.75¢ to $1.86 per pound. This downward movement in cheese prices may indicate softening demand or increased production, which could pressure Class III milk prices.
Global Dairy Trade (GDT) Auction Results:
Unlike the CME spot market, the GDT auction demonstrated strength in powder markets. Whole milk powder (WMP) values jumped 4.1%, while skim milk powder (SMP) prices leapt 4.7%. These significant increases suggest robust international demand, particularly from key importing regions like Southeast Asia and China. The divergence between domestic U.S. prices and international auction results highlights the global nature of dairy trade and the potential for arbitrage opportunities.
Future Price Outlook:
The average milk price is forecast to rise by 5% in 2025 compared to 2024, driven by favorable trends in recent Global Dairy Trade auctions. This projection indicates a generally optimistic outlook for global dairy markets, supported by expectations of continued strong demand and potentially tightening supplies in major exporting regions.
However, the U.S. market presents a contrasting picture, with projections of a decrease of 30 cents per hundredweight in all milk prices. This discrepancy between global trends and U.S. forecasts could be attributed to several factors:
Domestic Supply and Demand Balance: The U.S. might increase milk production or face lower domestic demand than global markets.
Export Competitiveness: A stronger U.S. dollar or increased competition from other exporting nations could impact the U.S.’s position in global markets.
Policy Changes: Potential shifts in U.S. dairy policy or trade agreements could influence domestic pricing.
Regional Variations: The U.S. forecast may be more heavily influenced by specific regional production trends or processing capacities.
Implications for Dairy Farmers:
These price movements and forecasts present a complex picture for dairy farmers. While global markets show signs of strength, U.S. producers may face challenges if domestic prices remain suppressed. Farmers must closely watch local and international market trends, adjust their production strategies, and explore new market opportunities to maximize their returns in this changing environment.
The Bottom Line
As the global dairy market navigates through unprecedented volatility in early 2025, dairy farmers worldwide find themselves at a critical juncture. The rising milk supply, shifting trade dynamics, and evolving consumer preferences create challenges and opportunities. While farmgate prices generally improve in many regions, trade tensions and potential tariffs loom large, particularly for U.S. producers eyeing the Mexican market. Success in this dynamic environment will hinge on adaptability and strategic foresight. Dairy farmers must focus on efficiency, embrace risk management strategies, and explore diversification opportunities. Whether investing in value-added products, adopting new technologies to address labor shortages, or implementing sustainable practices to meet evolving regulations, the path forward requires innovation and resilience. In 2025, the global dairy industry is positioned for growth but faces the risk of rapid changes due to geopolitical factors. Farmers who stay informed, remain flexible in their approaches, and capitalize on emerging market trends will be best positioned to thrive in this complex and ever-changing dairy ecosystem.
How is your operation adapting to these market trends? Share your experiences and strategies in the comments below.
Bullvine Daily is your essential e-zine for staying ahead in the dairy industry. With over 30,000 subscribers, we bring you the week’s top news, helping you manage tasks efficiently. Stay informed about milk production, tech adoption, and more, so you can concentrate on your dairy operations.
Dairy markets experienced unprecedented turbulence this week as trade tensions rattled the industry. The March Class III futures contract swung dramatically, moving more than $1 daily amid U.S. trade disputes with China and temporary détente with Mexico and Canada. Record cheese exports and shifting production patterns signal more volatility ahead.
Summary:
The dairy markets experienced unprecedented volatility this week amid escalating trade tensions. The March Class III futures contract demonstrated extreme instability, swinging more than $1 daily, while a 30-day trade détente with Mexico and Canada provided temporary relief. However, a new 10% U.S. tariff on Chinese imports sparked retaliation, though China notably spared dairy products. Market impacts were immediate, with CME spot prices declining across commodities – nonfat dry milk fell 1.5¢ to $1.33 per pound, Cheddar blocks dropped 1.75¢ to $1.86, and barrels decreased 3¢ to $1.78. Despite these challenges, U.S. cheese exports hit record levels in December, up 21% year-over-year, though milk powder exports slumped 23% to their lowest December level since 2016. The industry faces continued uncertainty as Mexico threatens higher tariffs on U.S. cheese if trade tensions resurface next month.
Key Takeaways:
March Class III futures experienced extreme volatility, swinging more than $1 in a single day on Monday, from 39¢ down to 71¢ up.
The U.S., Mexico, and Canada agreed to a 30-day trade détente, while the U.S. imposed a 10% tariff on Chinese imports. China retaliated but notably excluded whey and soybeans from tariffs.
CME spot prices declined across major dairy products: NDM fell 1.5¢ to $1.33/lb, Cheddar blocks dropped 1.75¢ to $1.86, and barrels decreased 3¢ to $1.78.
U.S. milk powder exports fell 23% year-over-year in December 2024, reaching the lowest December level since 2016.
December milk powder production was down 15% from the previous year, with 2024 total production dropping 13% to the lowest level since 2013.
Cheese production patterns shifted significantly in 2024: Gouda jumped 30.2%, Mozzarella rose 3.6%, while Cheddar fell 6.1%.
U.S. cheese exports hit record levels in December at 97 million pounds, up 21% from December 2023, with exports using 8% of total production in 2024.
Mexico dominated cheese exports, with shipments 30% higher than 2023, accounting for 38% of total U.S. cheese exports.
U.S. dairy heifer numbers have reached their lowest point since 1978, suggesting potential future supply constraints.
The Zisk app forecasts improved profitability for dairy farms in 2025, particularly for larger herds in the Southeast and Northeast regions.
A cheesemaker inspecting cheese wheels during the aging process, showcasing the careful monitoring required in cheese production amid current market volatility
Wild price swings hit dairy markets this week as trade tensions flared up. The March Class III milk futures contract moved up and down by more than $1 in a single day on Monday, showing just how uncertain things are right now.
Trade Situation
The U.S. made a 30-day deal with Mexico and Canada to pause new tariffs while they worked on border issues. Things with China are different – the U.S. put a 10% tax on Chinese goods, and China hit back with taxes on some U.S. products. For now, China isn’t taxing whey or soybeans, but that could change.
Market Prices Today
CME Spot Price Changes
Price
Change
Nonfat Dry Milk
$1.33/lb
-1.5¢
Cheddar Blocks
$1.86/lb
-1.75¢
Cheddar Barrels
$1.78/lb
-3¢
Uncertainty has pushed dairy prices lower across the board. Nonfat dry milk dropped 1.5¢ to $1.33 per pound, marking its lowest point since August. Cheddar blocks fell 1.75¢ to $1.86, while Cheddar barrels went down 3¢ to $1.78.
Production Changes
Cheese Production Changes 2024
% Change
Gouda
+30.2%
Mozzarella
+3.6%
Cheddar
-6.1%
Cheesemakers are shifting their production strategies significantly. Gouda production has surged by 30.2%, and Mozzarella output increased by 3.6%, setting new records. Meanwhile, cedar production has fallen by 6.1%. These changes reflect a move toward products that are popular with foreign buyers or ready for immediate consumption.
December Dairy Export Metrics
Change vs 2023
Total Cheese Exports
+21%
Milk Powder Exports
-23%
Cheese to Mexico
+30%
Share of Production Exported
8%
Total cheese exports hit a record in December at 97 million pounds. However, milk powder isn’t performing as well, with production falling 15% in December and exports dropping 23% to the lowest December numbers since 2016.
What This Means for Farmers
The outlook contains both positive and negative elements for dairy farmers. Larger farms in the Southeast and Northeast might see better profits in 2025. Cheese exports remain strong, especially to Mexico. However, due to trade uncertainty, farmers face significant challenges with unpredictable milk prices. There’s also concern that Mexico might tax U.S. cheese if trade talks go badly.
Smart Moves for Farmers
To handle these challenges, farmers should consider looking for different places to sell their milk and focus on producing high-quality components like fat and protein. Using futures contracts to protect against price drops and keeping up with market news and changes are essential strategies. Feed costs need careful watching, too.
The dairy market is tough right now, but farmers who stay informed and plan will be in the best position to handle whatever comes next.
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Can the EU and China agree on EV tariffs to save dairy farmers from trade troubles? Will this deal protect your business?
Summary:
The European Commission and China have agreed to intensify discussions to prevent EU import tariffs on China-made electric vehicles, exploring previously rejected minimum-price deals. This comes as the EU contemplates adding up to 35.3% tariffs on these vehicles, with EU trade chief Valdis Dombrovskis emphasizing the need for fair competition. Meanwhile, Dombrovskis voiced concerns about China’s potential tariffs on EU brandy, pork, and dairy imports. These negotiations are crucial as they affect the broader economic landscape, with proposed EU tariffs aiming to protect local businesses but risking retaliatory measures from China that could impact key export markets, particularly for the EU’s dairy sector.
Key Takeaways:
The European Commission and China are collaborating to prevent potential tariffs on China-built electric vehicles entering the EU.
Discussions are centered on re-evaluating a previously rejected minimum-price agreement for Chinese EVs.
The EU’s investigation into subsidies on Chinese EVs aims to maintain fair market competition.
EU trade chief Valdis Dombrovskis expressed concerns over China’s trade probes into European brandy, pork, and dairy imports.
Potential Chinese tariffs on EU exports, including pork and dairy, could significantly impact the European agricultural sector.
Effective solutions must comply with World Trade Organization (WTO) standards, ensuring they are enforceable and monitorable.
Consider a situation in which the milk from your hardworking dairy cows becomes much more expensive owing to international trade tensions. That is the prospective reality for European dairy producers as the EU and China step up attempts to prevent high tariffs on Chinese-made electric cars, which might have a knock-on impact on agricultural goods, notably dairy. Recent discussions between EU Trade Commissioner Valdis Dombrovskis and Chinese Commerce Minister Wang Wentao have brought these high-stakes negotiations to the forefront, with both sides reaffirming their political commitment to finding a mutually acceptable solution that is enforceable, monitorable, and WTO-compliant. As EU nations prepare to vote on adding tariffs of up to 35.3%, in addition to the current 10% import charge on vehicles, the conclusion of these discussions might have serious consequences. Will the re-examination of a previously rejected minimum-price agreement reduce tensions? What about China’s recent trade inquiries of EU goods such as brandy, pork, and milk? The stakes couldn’t be more significant for your bottom line.
Trade Tensions: EU-China EV Dispute – Economic Stakes and Implications
The European Union is investigating subsidies for Chinese-built electric cars (EVs) due to potential market distortions. The EU thinks these subsidies provide Chinese manufacturers an unfair competitive advantage, enabling them to sell electric vehicles cheaper in Europe. The proposed levies, which may reach up to 35.3% in addition to the current 10% import charge, seek to level the playing field for European manufacturers by combating these subsidies.
These tariffs carry a significant economic weight. While they may benefit the EU by safeguarding local businesses, fostering employment, and promoting regional innovation, their application also poses the risk of escalating trade tensions with China, a key trading partner. This escalation could lead to retaliatory measures against EU exports such as dairy goods and pork, potentially disrupting these markets and causing financial strain.
On the other hand, China risks losing market share in the European EV market, thereby stifling development in its expanding EV sector. Chinese automakers may have less revenue and more difficulties developing their worldwide presence.
The previously rejected minimum-price agreement, which involves establishing a price floor for EVs to prevent undercutting, is being reviewed as part of more significant attempts to find a mutually acceptable solution. Reexamining this agreement demonstrates both sides’ readiness to compromise and maybe prevent a trade war that might have far-reaching consequences for both economies.
High-Stakes Negotiations: EU and China Explore Solutions to EV Tariff Dilemma
The continuing talks between the EU and China have taken a significant turn. Both sides have shown a readiness to step up efforts to avert the application of EU import taxes on Chinese-built electric cars. The chats were regarded as ‘honest and helpful,’ demonstrating openness and sincerity in dealing with the situation’s intricacies.
Valdis Dombrovskis, the EU trade director, and Wang Wentao, the Chinese Commerce Minister, emphasized their political commitment to finding a solution that fits a variety of criteria. The solution must address the main difficulties, be enforceable and monitorable, and adhere to World Trade Organization (WTO) rules.
Dombrovskis reaffirmed that the EU’s anti-subsidy probe is based on factual evidence to safeguard fair competition and a level playing field. This is more than simply tariffs; it is about ensuring market integrity for all parties concerned. His remarks were this: “Both sides reaffirmed their political will to pursue and intensify efforts in finding a mutually agreeable solution, which would need to be effective in addressing the problem, enforceable, monitorable, and WTO-compatible.”
The discussions also examined the concept of pricing obligations, exporters’ minimum price commitments frequently associated with volume limitations. While the EU had said that the time for Chinese EV pricing bids had passed, this re-examination demonstrates a desire to stay flexible to reach a reasonable solution.
Both sides appreciate the economic stakes and the more considerable repercussions of such levies on the automotive industry and businesses with reciprocal dependence, such as dairy and pork exports. This multidimensional strategy demonstrates a mature and purposeful attempt to address trade concerns without becoming a full-fledged trade war.
Connecting the Dots: From EV Trade Wars to Dairy Pastures
How would the looming trade war over electric cars affect Europe’s dairy farms? Let us connect the dots. The EU’s worry over China’s trade probes into European imports of brandy, pig, and dairy goes beyond bureaucratic fighting; it is about defending a large portion of our agricultural sector.
For dairy producers, the issue is not abstract. China’s inspection of EU dairy goods, based on “questionable” assertions regarding subsidies and quality, threatens to limit shipments to one of the world’s major marketplaces. Tariffs imposed by China on certain commodities might have far-reaching consequences. Consider a glut of dairy goods flooding the European market because they cannot reach China. Prices might fall across the board, from significant dairy farmers to tiny family farms, reducing profit margins for everyone.
For valid reasons, the EU deems these inquiries unjustified. First and foremost, these allegations often lack strong proof and seem retaliatory. Second, the claims have been intentionally timed to apply pressure during the present EV tariff talks. Furthermore, trade obstacles contradict the EU and WTO’s fair trade and competitiveness ideals.
What is at risk here is the immediate financial impact of proposed tariffs and their long-term consequences. Dairy producers may experience lower profitability, which might result in cost cuts or, in the worst-case scenario, the closure of facilities. The larger agricultural supply chain, from feed suppliers to transportation companies, would suffer.
If you are part of the dairy industry, now is the time to pay close attention to these high-stakes discussions. The outcomes could have long-term implications for market dynamics. So, as you tend to your cows or manage your operations, consider how global trade rules may impact your farm. Being well-informed and proactive in understanding these implications is crucial for the future of your business.
Historical Context: Learning from Past EU-China Trade Disputes
The ongoing conversations between the EU and China on electric car tariffs are not happening in a vacuum. Historically, the two economic powerhouses have engaged in several trade conflicts. Consider the almost ten-year-old solar panel story. In 2013, the EU accused Chinese manufacturers of dumping solar panels in the European market at below-market prices, harming European producers.
The issue erupted when the EU placed interim anti-dumping levies on Chinese solar panels. However, the settlement was reached after extensive discussions, with China agreeing to a minimum price for its solar panels and a volume limit for European sales. This deal established a temporary detente, currently known as the EU-China solar panel pricing undertaking, which terminated in 2018.
Similarly, during the “Bra Wars” conflict in the textile industry in 2005, the EU imposed limitations on Chinese imports. The resolution entailed a bilateral deal in which China agreed to limit its exports voluntarily to avoid stricter import restrictions from the EU.
These historical remedies often required compromise, minimum pricing, or limiting quantities, demonstrating a negotiated settlement pattern over long-standing tariff issues. As the EU and China handle the electric car tariff problem, one might anticipate a similar intense discussion route leading to mutually acceptable conditions. Given the enormous common interests and economic stakes, the result of this conflict may very likely follow historical patterns, affecting industries other than the automobile industry, including the critical dairy sector.
Navigating the Tightrope: Ensuring Fair Trade While Protecting Our Dairy Industry
From a conservative standpoint, the importance of maintaining fair trade standards while safeguarding domestic businesses such as the dairy industry cannot be stressed enough. The continuing talks between the EU and China show the difficulty of balancing the need to secure competitive markets and the survival of local businesses. The EU’s probe into possible discriminatory subsidies for Chinese electric cars (EVs) seeks to prevent the European EV industry from being overrun by low-cost alternatives that may undercut local manufacturers.
This takes us to the more significant ramifications for the agriculture industry, particularly dairy producers and allied sectors. If the EU imposes or maintains high tariffs on Chinese EV imports, we must be prepared for counter actions from China. This might directly affect the EU’s dairy sector, which relies on export markets like China. Tariffs on EU dairy goods would not only pinch dairy producers’ profits, but they might also cause an overstock in domestic markets, further reducing prices.
In contrast, agreeing to a minimum-price agreement with China may establish a precedent for managed trade deals, perhaps providing both sectors with a more stable and predictable environment. However, there is a danger that such agreements may be seen as protectionist and violate World Economic Organization (WTO) laws, straining international economic ties even more.
In the long run, these agreements will influence more than just the EV market; they may impact global trade patterns. Local industries must innovate and stay competitive as politicians navigate these difficult trade seas. Our dairy producers must attentively monitor these trends. Decisions made today will impact not just market circumstances but also the sustainability of their firms in a globalized economy.
Defending fair competition while protecting domestic jobs and businesses is a delicate balance that demands knowledge and insight. We must lobby for policies that strike the right balance to ensure sustained development and stability in the electric car and agriculture industries.
The Bottom Line
The current conversations between the EU and China have revealed crucial issues and possible solutions that might substantially influence sectors other than the automobile industry. The stakes are more significant than ever, with imminent taxes on Chinese-built EVs and retaliatory measures on EU products such as pork and dairy. How these international trade rules evolve will directly impact your company’s environment and market circumstances. Consider how international trade trends may affect your everyday operations and strategies. It is more important than ever to keep ahead of the curve and aggressively connect with local authorities or industry organizations.
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Explore the evolving North American dairy trade: How are US-Mexico relations strengthening amid Canada’s growing tensions with global trade partners? Discover more.
The current state of dairy trade in North America reveals contrasting dynamics. The US and Mexico maintain a cooperative relationship, regularly meeting to foster mutually beneficial dairy policies. In contrast, Canada’s protective trade measures have strained relations with the US, New Zealand, and the UK, leading to multiple disputes.
“The coming US election and possible upcoming changes in Canadian federal government leadership, trade dynamics, and policy uncertainty will continue to be the biggest factors affecting Canada’s dairy industry.” — Al Mussell, Canadian Agri-Food Policy Institute
The US and Mexico have regularly met since 2016 to strengthen their dairy trade relationship.
Canada’s protective stance has led to significant disputes over market access and dairy trade quotas.
Recent developments indicate ongoing challenges with potential impacts on future trade negotiations.
As North America’s dairy trade landscape shifts, stakeholders from all nations play a crucial role in closely monitoring for signs of stability and resolution. Their involvement is key to understanding the current state of affairs and shaping the future of the industry.
US-Mexico Dairy Summit: Strengthening Cross-Border Alliances in Dairy Trade
The recent meeting in Chihuahua, Mexico, was not just pivotal, but a beacon of hope for renewing commitments between US and Mexican dairy industry leaders. The event underscored the robust and ongoing partnership and the shared focus on mutually beneficial dairy policies, instilling optimism for future cooperation.
The US delegation, led by the National Milk Producers Federation and US Dairy Export Council, included representatives from over 14 major companies. Their Mexican counterparts, the Mexican Association of Milk Producers and the National Chamber of Milk Industries, are essential in advancing dairy trade relations, ensuring both nations benefit from strategic policy alignment.
Navigating Uncertain Waters
Al Mussell, a prominent figure in the Canadian Agri-Food Policy Institute, recently delivered a keynote address at the Progressive Dairy Operators Symposium. His insights on the upcoming US presidential election and potential changes in Canadian federal leadership were particularly enlightening.
Mussell described American trade policy as increasingly protectionist, stressing the need for Canada’s dairy sector to stay alert and adaptable. Understanding this stance is crucial to safeguarding the Canadian dairy market and its regulatory framework. New US trade policies could introduce challenges, requiring strategic responses from Canadian stakeholders.
Mussell’s insights are particularly relevant amid international tensions, as countries like the US, New Zealand, and the UK criticize Canada’s protectionist trade practices. His analysis underscores the importance of understanding these global dynamics and reinforcing Canada’s dairy industry against external pressures.
Protectionist American Polocies: A Significant Challenge for Canada’s Dairy Sector
Al Mussell’s view on American trade policy being protectionist highlights a pivotal issue for Canada’s dairy sector. He stresses the importance of Canadian policymakers and industry leaders grasping this stance to fortify the sector in a competitive global market. Mussell’s insights call for sharp trade negotiations and policies to shield Canada’s dairy industry from adverse external influences.
Canada’s protectionist measures in its dairy market face mounting international criticism. The US argues that Canada’s dairy trade quotas don’t match USMCA commitments, reflecting considerable frustration. New Zealand shares this sentiment, with Trade Minister Todd McClay criticizing Canada’s partial compliance with a CPTPP ruling on dairy market access. McClay insists on complete adherence to trade agreements and is ready to take further legal steps if necessary.
Britain also voiced dissatisfaction, halting trade talks with Canada, particularly impacting the dairy sector. This international pressure highlights the tension around Canada’s protectionist policies, urging Canada to reassess its stance to reduce disputes and uphold solid trade relations.
New Zealand Stands Firm on CPTPP Compliance, Criticizes Canada’s “Cynical” Maneuvers
In a heated dispute under the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), New Zealand Trade Minister Todd McClay slammed Canada for not fully complying with a trade ruling. McClay called Canada’s actions “cynical” and stated firmly that New Zealand will not back down. He’s seeking urgent legal advice on the next steps, emphasizing that Canada still has a chance to meet its CPTPP obligations. This follows four market access claims by New Zealand against Canada last year. New Zealand’s approach remains undisclosed but signals a vigorous pursuit of justice in trade.
Canada’s Dairy Quotas: A Point of Contention in USMCA Trade Dynamics
US dairy organizations and officials are frustrated with Canada’s dairy trade quotas, claiming they’re inconsistent with the USMCA. They argue that Canada’s quota system unfairly limits American dairy products’ access to the Canadian market. Despite the USMCA’s goal of freer trade, Canada’s approach is seen as protectionist, disadvantaging US dairy exporters. This issue highlights the ongoing trade tensions and challenges in international agreements.
Stalled Negotiations: UK-Canada Dairy Trade Talks Face Persistent Deadlock
The halted trade negotiations between the UK and Canada over dairy and other goods highlight a significant impasse, which has lasted over two years. This deadlock reflects deeper trade tensions and conflicting policies that have blocked progress. Despite initial enthusiasm, critical gaps still need to be solved, making the future of bilateral trade relations uncertain.
Bill C-282: A Legislative Bombshell Shaking Canada’s Dairy Trade Policy
Bill C-282 is set to significantly reshape Canada’s dairy trade policy. This proposed law aims to limit trade negotiators from granting further market access for dairy, poultry, and eggs in future trade deals, reinforcing the protectionist stance that has drawn criticism from the US, New Zealand, and the UK. This legislation could heighten existing tensions and hinder future trade talks if passed.
The ramifications of Bill C-282 are substantial. Canada risks alienating itself in the global market by legally restricting negotiators and facing broader agricultural trade consequences. Supporters argue it will protect Canadian agriculture, but critics warn of potential retaliatory measures and reduced global influence.
Bill C-282, having successfully passed its second Senate reading, is now on the verge of becoming law. Its adoption would mark a significant shift in Canada’s trade policy, potentially drawing attention from both domestic and international stakeholders.
The Bottom Line
North America’s dairy trade landscape is indeed complex and ever-changing. The strong ties between the US and Mexico contrast sharply with the ongoing tensions with Canada. While US and Mexican industries unite over collaborative policies, Canada faces accusations of protectionism from the US, New Zealand, and the UK. However, the Canadian dairy sector, with its robust supply management systems, stands strong in the face of these challenges. Understanding these tensions’ geopolitical and economic implications is crucial for stakeholders navigating this evolving market, but they can do so with confidence in the sector’s resilience.
Key Takeaways:
The US and Mexico reaffirmed their cooperative dairy trade relationship at a summit in Chihuahua, Mexico.
More than 14 US dairy companies, alongside prominent Mexican dairy organizations, participated in the summit.
Al Mussell of the Canadian Agri-Food Policy Institute highlighted the impact of potential changes in US and Canadian political leadership on dairy trade dynamics.
American trade policy is perceived as protectionist, posing challenges for the Canadian dairy sector.
New Zealand criticizes Canada’s non-compliance with CPTPP dairy trade rulings, threatening further legal action.
The US and Canadian dairy trade tensions persist due to disagreements over USMCA dairy quota implementations.
The UK-Canada dairy trade talks remain stalled, with no progress over the past two years.
Bill C-282 is advancing in the Canadian Senate, potentially tightening future dairy market access concessions in trade negotiations.
Summary: The dairy trade in North America is complex and evolving, with the US and Mexico maintaining cooperative relationships. Canada’s protective trade measures have strained relations with the US, New Zealand, and the UK, leading to multiple disputes. The upcoming US election and potential changes in Canadian federal government leadership, trade dynamics, and policy uncertainty will continue to affect Canada’s dairy industry. The US-Mexico Dairy Summit in Mexico reinforced commitments between US and Mexican dairy industry leaders. Al Mussell, a prominent figure in the Canadian Agri-Food Policy Institute, has described American trade policy as increasingly protectionist, stressing the need for Canada’s dairy sector to stay alert and adaptable. Canada’s protectionist measures face international criticism, with the US arguing that Canada’s dairy trade quotas don’t match USMCA commitments. New Zealand and Britain have also voiced dissatisfaction, halting trade talks with Canada, particularly impacting the dairy sector. Bill C-282, aiming to significantly reshape Canada’s dairy trade policy, is on the verge of becoming law.
Is China escalating trade tensions with the EU? Discover how a potential anti-subsidy probe into EU dairy imports could impact global trade dynamics.
These tensions have been fueled by various issues, from steel disputes to electric vehicle conflicts, which have led to a standoff between the two economic powers. The steel disputes center on accusations of China’s dumping practices, where China allegedly sells steel at below-market prices to the EU, undercutting local industries. This led the EU to impose anti-dumping duties on various Chinese steel products. A notable instance was in 2016, when the European Commission enacted definitive anti-dumping measures on certain Chinese steel items, intensifying tensions and triggering retaliation from Beijing.
Similarly, the conflict over electric vehicles (EVs) has heightened trade disputes, with the EU alleging that state subsidies give Chinese EV manufacturers an unfair advantage globally. The EU’s investigation into these subsidies reflects broader concerns about market distortion and unfair competition, which could lead to tariffs on Chinese EVs. Beijing has hinted at retaliatory measures, deepening trade tensions and spotlighting industrial policy issues and state intervention in both economies.
“Trade wars have no winners, but they reshape the landscape of global trade,” stated a recent analyst report from the European Commission. Published in September 2023, this comprehensive report also highlights that “continued trade frictions could lead to significant disruptions in supply chains and increased costs for consumers and businesses alike.” Additionally, the report underscores the necessity for “transparent and fair trade practices” in mitigating these economic conflicts.
This potential probe, a significant development in the ongoing trade disputes between China and the EU, could have profound and lasting effects on the economic relations between these two global powers. Its implications are far-reaching, underscoring global trade dynamics’ complexities and broad implications.
The Economic and Strategic Forces Behind the Decline in EU Dairy Exports to China
Year
EU Dairy Exports to China (in € billion)
2021
2.2
2022
2.0
2023
1.7
Source: Eurostat data released by the European Commission’s Directorate-General for Agriculture and Rural Development
According to Eurostat, EU dairy exports to China have dropped from €2 billion in 2022 to €1.7 billion in 2023. This decline can be attributed to several factors, including changes in Chinese import policies, increased competition from other dairy-exporting countries, and a more competitive domestic dairy industry in China. In addition, geopolitical tensions and economic strategies aimed at reducing dependency on foreign commodities may have significantly influenced this outcome. Understanding these reasons offers a comprehensive view of the current trade dynamics.
This reduction signals underlying economic pressures and strategic considerations, including increased competition, changing consumer preferences, or China’s growing dairy sector aiming for a larger domestic market share.
With these tensions, Chinese enterprises are pushing for an “anti-subsidy” investigation to protect domestic industries from unfair trading practices. The sharp decline in imports could validate concerns over potential market distortion due to EU subsidies. This scenario complicates China-EU trade relations and hints at intensified scrutiny and regulatory actions that could reshape the trade landscape.
Understanding the Implications of a Proposed Anti-Subsidy Investigation
An anti-subsidy investigation, a countervailing duty probe, determines whether imported goods benefit from unfair subsidies, providing a competitive edge. This process is structured to ensure a fair evaluation.
The key steps are:
Initiation: A domestic industry or government agency files a petition with evidence of harmful subsidies.
Preliminary Review: Authorities gather initial data from complainants and exporters to assess the validity of the claims.
Notice of Investigation: An official notice is published outlining the scope and nature of the investigation.
Data Collection and Verification: Data from exporters, importers, and producers is collected and verified through on-site visits.
Preliminary Determination: Authorities determine the existence and impact of subsidies based on initial data.
Definitive Determination: A final decision is made after further analysis. If confirmed, countervailing duties may be imposed.
Implementation and Monitoring: Duties are applied, and compliance is monitored to mitigate unfair trade effects.
Throughout the process, authorities require robust evidence, such as financial records and production costs, to validate claims and ensure fair outcomes.
Chinese enterprises are contemplating a probe into financial aid provided to EU dairy producers, which they claim distorts market balance.
This investigation would see Chinese authorities reviewing subsidies—like grants and tax incentives—that EU dairy exporters may receive. The aim is to determine if these subsidies violate World Trade Organization (WTO) rules, prohibiting unfair trade practices such as lowering production costs and enabling cheaper sales of European dairy products in China. The WTO is crucial in regulating international trade and resolving trade disputes.
Sino-European Trade Disputes: A Multifaceted Economic Standoff
The potential dairy probe continues the ongoing trade disputes that define Sino-European economic relations. These disputes span various sectors, with China earlier probing EU-branded brandy imports for fairness. Conversely, the EU has launched investigations into Chinese products like iron, steel, and electric vehicles, often resulting in new tariffs to protect domestic industries. This back-and-forth underscores the escalating trade friction, with both economies striving to safeguard their interests. This dynamic forms the backdrop for the potential dairy investigation, highlighting the high economic stakes.
Trade tensions between China and the EU are not new, marked by ongoing disputes in various sectors. To understand the potential anti-subsidy probe into EU dairy imports, we must look at recent cases shaping their trade relations:
Iron and Steel Tariffs: The EU imposed tariffs on Chinese iron and steel to counter subsidized imports.
Electric Vehicles: The EU investigates Chinese electric vehicle makers, possibly leading to new duties over state support concerns.
“These investigations show deep-rooted suspicion and strategic moves on both sides, highlighting the complexity of Sino-European trade relations.” — Trade Analyst, Global Economic Forum.
The dairy import issue reflects a broader trend of economic skirmishes, revealing both sides’ strategic, often protectionist trade policies.
China’s Investigation Strategy: A Manifestation of Long-Standing Trade Scrutiny and Economic Nationalism
China’s potential probe into EU dairy imports is part of a broader trend of trade scrutiny and economic nationalism. Earlier this year, Chinese businesses requested an investigation into EU pork imports, signaling a strong stance on protecting domestic industries. This mirrors past actions where China has scrutinized various European goods, intensifying trade tensions.
These previous investigations set the stage for the current situation. The repeated scrutiny of European products has likely encouraged Chinese businesses and officials to use nationalist economic policies as strategic tools. By targeting the European dairy sector now, it’s evident that past actions have emboldened China to take a more assertive role in trade negotiations.
China’s emphasis on economic nationalism has consistently shaped its trade policies. These policies focus on bolstering domestic industries and reducing reliance on foreign goods. This approach includes protectionist measures like tariffs, subsidies for local businesses, and strict regulations on foreign investments. The goal is to strengthen local industries and manage global economic risks.
Historically, China has implemented measures aligned with this philosophy. High tariffs on foreign tech products and initiatives like “Made in China 2025” aim to boost domestic technology, pharmaceuticals, and manufacturing capabilities. China’s control over rare earth mineral exports, essential for high-tech industries, exemplifies its strategic control over global supply chains.
China often uses anti-dumping and countervailing duty investigations to shield domestic industries from perceived unfair competition. These probes investigate imports sold below-market rates or benefiting from unfair subsidies, leading to extra duties. An example is the investigation into U.S. agricultural products, resulting in significant tariffs hampering American exports to China.
“China’s economic nationalism strengthens its economic sovereignty while navigating globalization complexities,” says Dr. Wei Zhang, an expert in Sino-global trade.
This strategy has recently included consumer goods and agriculture. The potential anti-subsidy probe into EU dairy imports continues this trend, showing China’s intent to support domestic dairy producers and reduce foreign dairy dependence. By fostering local business growth, China aims to reinforce economic self-reliance amidst trade tensions with blocs like the EU.
The Potential Fallout of an Anti-Subsidy Investigation on EU Dairy Imports
The potential outcomes of a Chinese anti-subsidy investigation into EU dairy imports are significant, particularly for the dairy industry. If the investigation leads to increased tariffs on EU dairy products, it could reduce their competitiveness in the Chinese market. This could worsen the decline in EU dairy exports and pressure European producers to face global competition, potentially leading to a restructuring of the industry.
If the investigation proceeds, it could strain diplomatic and economic relations between China and the EU, potentially leading to a trade war. Such a scenario would harm both economies and escalate current trade tensions. The EU might respond with its trade measures against Chinese exports, further complicating bilateral engagements.
For the dairy industry, European producers might need to explore alternative markets, facing higher costs and logistical challenges. This potential shift in market dynamics could significantly impact the sector, affecting innovation and efficiency.
Globally, this move could deepen economic nationalism and protectionism, eroding free trade and slowing economic growth. Companies across sectors might face increased uncertainty, impacting their investment and production decisions. This investigation highlights the fragile state of international trade relations and the complexities of navigating this landscape.
China’s impending “anti-subsidy” investigation into EU dairy imports could escalate trade tensions significantly, impacting more than just the dairy sector. This move might disrupt global supply chains, increase costs, and challenge international trade norms. Multiple industries could feel these ripple effects, leading to higher expenses, logistical challenges, and tightened cross-border trade practices.
Possible consequences include:
Disrupted Supply Chains: Electronics and automotive manufacturing may face delays and higher operational costs.
Cross-Industry Tariffs: New tariffs could affect various products, including machinery, pharmaceuticals, and consumer electronics.
Shifts in Trade Policies: Protectionist policies may reshape trade agreements and create stricter regulations.
Economic Uncertainty: Ongoing trade disputes can lead to financial instability, discouraging investment and innovation.
“A single investigation can trigger significant economic implications,” notes Dr. Emily Zhang, an expert in international trade policy.
A potential trade war between two major economic powers like China and the EU could unsettle global markets and prompt a re-evaluation of economic strategies worldwide. This situation highlights the complex interdependencies in the global economy, where actions by major players can have far-reaching effects.
The Bottom Line
The outlook for China-EU trade relations is troubling. Continued investigations and potential retaliatory actions could heighten tensions, leading to more stringent trade barriers and limited market access. However, these challenges might also drive renewed dialogue and bilateral efforts to resolve economic issues. Despite the current tensions, there is still a possibility for a peaceful resolution and a return to more stable trade relations. The stakes are high, and the outcome will shape both regions’ future economic and strategic dynamics.
Key Takeaways:
Chinese enterprises are preparing to request an “anti-subsidy” investigation into EU dairy imports, signaling a potential escalation in trade tensions.
EU dairy exports to China have declined significantly, from €2 billion in 2022 to €1.7 billion in 2023, according to Eurostat data.
This potential probe is part of a broader pattern of trade disputes between China and the EU, including investigations into products like EU-branded brandy and Chinese electric vehicles.
Previous calls for similar investigations, such as the one on EU pork imports, highlight a continued scrutiny of European products by Chinese businesses.
A successful anti-subsidy investigation could lead to increased tariffs on EU dairy products, potentially reducing their competitiveness in the Chinese market and exacerbating the decline in exports.
The investigation could signify deeper economic nationalism and trade protectionism from China, impacting broader Sino-European economic relations.
Summary: The ongoing trade disputes between China and the EU are fueled by issues such as steel disputes and electric vehicle conflicts. Steel disputes stem from accusations of China’s dumping practices, leading to the EU imposing anti-dumping duties on Chinese steel products. Electric vehicle disputes have heightened tensions, with the EU alleging state subsidies give Chinese EV manufacturers an unfair advantage globally. The EU’s investigation into these subsidies reflects concerns about market distortion and unfair competition, potentially leading to tariffs on Chinese EVs. Beijing has hinted at retaliatory measures, deepening trade tensions and highlighting industrial policy issues and state intervention in both economies. A potential probe into EU dairy exports to China could have profound effects on the economic relations between the two global powers. This scenario complicates China-EU trade relations and hints at intensified scrutiny and regulatory actions that could reshape the trade landscape. If the investigation leads to increased tariffs on EU dairy products, it could reduce their competitiveness in the Chinese market, worsen the decline in EU dairy exports, pressure European producers to face global competition, and potentially lead to a trade war.
Are dairy exports and milk production set for another uninspiring year in 2024? Discover the trends and expert insights shaping the industry’s future.
Bart Peer, voeren van vet aan melkvee in Beuningen
t.b.v. Misset/Boerderij Opdrachtnummer: 416573 Kostenplaats 06003
Fotograaf: Van Assendelft Fotografie
The dairy industry‘s backbone has been its milk yields and exports, critical for regional economies and farmers’ livelihoods. While demand for high-quality dairy products boosts growth and revenue, the sector faces significant changes.
The U.S. dairy industry is currently at a crossroads. Year-over-year milk production declined by 1.3% in February 2024. The U.S. milking cowherd has shrunk monthly since June 2023, with limited heifer availability adding to the woes. Despite some resilience in milk component production from December to February, larger challenges overshadow these gains.
“It’s hard to imagine milk production making material improvements with cow numbers down year-over-year, heifers in short supply, and rough economics in several regions,” says Phil Plourd, president of Ever.Ag Insight.
With fewer cows, economic stress, and stagnant heifer replacements, 2024 may bring more uninspiring results. Consequently, the dairy sector‘s growth and sustainability metrics could fall short, impacting potential recovery and expansion.
Understanding The Decline: Year-Over-Year Milk Production Trends
Notably, the USDA Milk Production Report highlights a 2% year-over-year decline across 24 central states in April. This pattern aligns with nationwide trends, reflecting more profound systemic challenges in the U.S. dairy sector. Although May 2024 saw a slight increase in per-cow output, total production fell marginally.
Several key points arise from these reports. The persistent reduction in herd size contrasts with improved per-cow productivity, which fails to offset the decline fully. The milking cow population has dropped to 8.89 million head, a year-over-year reduction of 55,000.
Regional disparities add complexity. Some areas sustain or boost production slightly, but places like New Mexico saw a drastic 17.3% decline, exposing regional vulnerabilities.
The economic landscape, marked by falling prices and moderate shipment volume growth, also dampens producers’ recovery prospects. Thus, closely monitoring economic conditions will be crucial for predicting future milk production trends.
Year
Milk Production Volume (in billion lbs)
Year-Over-Year Change (%)
2020
223.2
+2.2%
2021
225.6
+1.1%
2022
223.5
-0.9%
2023
220.0
-1.6%
Analyzing Annual Shifts in Dairy Export Patterns
The past year has marked significant changes in dairy export trends, with volume and value experiencing notable fluctuations. Although 2023 saw U.S. dairy exports total $8.11 billion, this represented a 16% decrease from the record year of 2022, highlighting the volatility of global dairy markets.
One primary factor in these shifts is the decline in domestic milk production, directly impacting export volumes. Despite some milk and milk component production growth from December to February, the overall trend remains challenging.
Volatile agricultural markets and external factors like El Niño weather patterns have further complicated global supply chains. Additionally, reductions in farmgate milk prices and persistent on-farm inflation continue to strain U.S. dairy farms.
Year
Total Export Value (in billion USD)
Percentage Change from Previous Year
Key Factors
2020
6.2
+5%
Stable milk prices, moderate global demand
2021
7.0
+13%
Increased global demand, favorable trade agreements
2022
9.7
+19%
High global demand, favorable prices, export market expansion
2023
8.11
-16%
Weakened global demand, eased prices
2024 (Forecast)
8.5
+5%
Slow recovery in demand, stable prices
Key Determinants in Milk Production Outcomes
Environmental challenges like droughts and extreme weather events have become significant obstacles to stable milk yields. These conditions can severely affect forage quality and availability, impacting the quantity and quality of milk from dairy cows. For instance, droughts reduce grazing land and drive up feed costs, further straining production budgets.
Rising production costs have also hindered farmers’ ability to invest in essential technologies. Modern dairy farming requires advanced milking systems, automated feeding mechanisms, and enhanced herd management software. Yet, persistent economic pressures and on-farm inflation make such investments challenging, directly affecting milk yields by reducing farm efficiency.
Labor shortages continue to impede dairy operations. The industry relies on a consistent and skilled workforce. Still, the COVID-19 pandemic and immigration policy uncertainties have left many farms understaffed. This labor scarcity delays essential operations and hinders the implementation of quality control measures, impacting overall milk production.
Key Influencers on Dairy Export Performance
Trade tensions continue to cloud the outlook for U.S. dairy exports. Tariffs and trade barriers stemming from geopolitical conflicts create uncertainty and hinder competitiveness in global markets. These economic disruptions inflate costs and squeeze profit margins for U.S. dairy farmers.
Additionally, changing consumer preferences are shifting demand away from traditional dairy products to plant-based alternatives, driven by health and environmental concerns. This trend challenges dairy exporters to develop innovative strategies to recapture market share.
Moreover, the U.S. dairy industry faces stiff competition from dairy powerhouses like New Zealand and the European Union. These countries are backing their dairy sectors with proactive export strategies and government support, making the global market fiercely competitive. U.S. producers must innovate and improve efficiency to sustain their place in the international market.
Potential Implications for 2024
The anticipated decline in dairy exports could impose significant financial strain on U.S. dairy farmers. With exports representing a crucial revenue stream, any downturn will likely impact their bottom lines and economic stability. This financial pressure may force producers to reassess their operations, potentially leading to further reductions in herd sizes and investments.
Compounding these challenges, lower milk yields are expected to affect overall supply, which could, in turn, drive up prices. While higher prices might seem beneficial, the reality is more nuanced. Increased prices can lead to reduced consumer demand and heightened competition from global markets, making it harder for U.S. products to remain competitive.
In light of these hurdles, there is a clear need for government intervention and support to stabilize the industry. Programs such as Dairy Margin Coverage (DMC) have relieved producers, and their continuation will be essential. Additionally, new initiatives could be explored in the upcoming Farm Bill to address the evolving challenges faced by the dairy sector, helping to ensure its long-term viability and sustainability.
Producers’ Perspective: Navigating a Challenging Market
Producers nationwide are acutely aware of today’s challenging market. Many are reevaluating their strategies with dwindling cow numbers and fluctuating feed costs driven by volatile agriculture markets and adverse weather conditions. Persistent declines in farmgate milk prices and high production costs continue to squeeze profit margins, leaving dairy farmers in a precarious position.
In response, innovative measures are being adopted. Beef-on-dairy operations, merging beef genetics with dairy herds, enhance profitability. Raising fewer heifers and cutting operational costs are becoming standard practices. Automation and technology promise to improve efficiency and cost management.
However, the pandemic-induced labor shortage remains a critical bottleneck, with health concerns and regulatory constraints limiting workforce availability. Producers are diversifying income streams to mitigate these issues, venturing into agritourism or other agricultural enterprises to buffer against market volatility.
Looking ahead, producers are closely monitoring market dynamics and profit margins, with any potential rebound in milk production depending on improved economic conditions and informed decision-making. Enhanced sustainability practices are also a focus as farmers strive to reduce methane emissions and implement eco-friendly methods.
Future Forecast: What Lies Ahead for Dairy Exports and Production?
The outlook for dairy exports and milk production is complex and shaped by various factors. Dr. Christopher Wolf of Cornell University emphasized the role of El Nino weather patterns, potentially causing feed cost volatility. Combined with persistent on-farm inflation, these conditions challenge dairy producers facing reduced farmgate milk prices.
The shrinking dairy herd adds to the difficulties, with a limited supply of heifers restricting milk production growth. USDA reports forecast a slight downward trend for 2024.
However, high beef prices and decreasing milk production might boost milk prices later in the year, offering market stability. Krysta Harden of the U.S. Dairy Export Council aims for a 20% export target, reflecting ambitions to expand the U.S. presence in global dairy markets despite trade uncertainties.
In contrast, the EU projects a 1% increase in cheese exports but declines in butter and skim milk powder, presenting market gaps that U.S. exports could fill to boost overall value and volume.
The future of U.S. dairy exports and milk production hinges on economic conditions, weather patterns, and strategic industry moves, requiring stakeholders to stay informed and adaptable.
The Bottom Line
The dairy industry’s challenges in 2024 are undeniable. The outlook appears grim with a persistent decline in milk production, reduced cowherd sizes, and a heifer shortage. Although U.S. dairy exports showed some promise, achieving long-term goals is still being determined amid fluctuating markets and soft milk prices.
Industry stakeholders must take proactive measures. It is crucial to explore strategies to enhance production efficiency and improve margins. Expanding export opportunities could capitalize on a potential market resurgence later this year.
The path to recovery is complex but possible. With informed decision-making and efforts to address current challenges, stabilization, and growth are within reach. Adapting to market trends will be vital in navigating these turbulent times successfully.
Key Takeaways:
Year-over-year milk production saw a 1.3% decline in February 2024.
The U.S. milking cowherd has been consistently shrinking each month since June 2023.
Despite a dip in cow numbers and heifer availability, milk component production showed some growth from December through February compared to the previous year.
Phil Plourd, president of Ever.Ag Insight, highlights the difficulty in imagining significant improvements in milk production under current conditions.
Economist Dan Basse expects tight cow numbers to persist given the static heifer replacement rates.
U.S. dairy exports were strong in February 2024; however, they remain below the record levels achieved in 2022.
Dairy Margin Coverage (DMC) indemnity payments provided essential support to producers in 2023 amid declining feed prices and soft milk prices in 2024.
Summary: The dairy industry, which relies on milk yields and exports for regional economies and farmers’ livelihoods, is facing significant challenges in 2024. In February 2024, year-over-year milk production declined by 1.3%, with the U.S. milking cowherd shrinking monthly since June 2023 and limited heifer availability adding to the woes. Despite some resilience in milk component production from December to February, larger challenges overshadow these gains. The USDA Milk Production Report highlights a 2% year-over-year decline across 24 central states in April, reflecting more profound systemic challenges in the U.S. dairy sector. Regional disparities add complexity, with some areas sustaining or boosting production slightly, while places like New Mexico saw a drastic 17.3% decline. Milk production volume has seen significant changes in the past year, with U.S. dairy exports totaling $8.11 billion in 2023, a 16% decrease from the record year of 2022. Environmental challenges like droughts and extreme weather events have become significant obstacles to stable milk yields, impacting forage quality and availability, and straining production budgets. Rising production costs have hindered farmers’ ability to invest in essential technologies, and labor shortages continue to impede dairy operations. Trade tensions and geopolitical conflicts are causing uncertainty and hindering global market competitiveness for U.S. dairy exports. Government intervention and support are needed to stabilize the industry.
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