84% tariffs slam U.S. dairy exports to China. Why can’t farmers capitalize on China’s milk shortage despite crashing prices & production?
EXECUTIVE SUMMARY: China’s dairy production is plummeting (-9.2% in 2025), but U.S. farmers face insurmountable barriers: 84% retaliatory tariffs, New Zealand’s duty-free dominance, and China’s lactose-intolerant population. While milk prices crashed by 15% and skim powder production dropped by 30%, structural issues like shrinking birth rates and economic stagnation limit demand. With FTAs favoring competitors and trade tensions escalating, experts urge dairy producers to pivot to Mexico, Southeast Asia, and value-added niches instead of chasing China’s shrinking market.
KEY TAKEAWAYS:
84% tariffs make U.S. dairy exports to China 104% more expensive than New Zealand’s duty-free shipments.
New Zealand controls 46% of China’s import market—their FTA advantage is irreversible without policy shifts.
China’s milk consumption growth is capped by lactose intolerance (87% in teens) and declining birth rates.
Diversify or die: USDA grants and co-ops offer lifelines for exploring Latin America, MENA, and specialty markets.
Economic headwinds (real estate crisis, youth unemployment) slash Chinese spending on “non-essential” dairy.
China’s dairy sector is shrinking fast, with milk collections down 9.2% in early 2025 compared to last year. Milk prices have dropped 15%, and skim milk powder production has plummeted by more than 30%. While this might sound like an opportunity for U.S. dairy exports, the reality is much more brutal.
Why China’s Dairy Market is Shrinking
After years of pushing hard to expand its dairy industry, China is now dealing with serious oversupply problems. Between 2018 and 2023, their milk production jumped by 27% (24.7 billion pounds) as part of their national plan to rely less on imports.
“Dairy production has remained stable, and the number of cows has been gradually adjusted,” China’s agriculture ministry stated in December 2024. “While the oversupply of milk will continue in the first half of 2025, it is expected that supply and demand imbalances will ease in the second half of the year.”
The problem? Chinese consumers aren’t drinking enough milk to keep up with all this production. Raw milk prices crashed from 4.38 yuan/kg in 2021 to just 3.14 yuan/kg by September 2024 – a brutal 28% drop forcing many smaller farms out of business.
Why China Isn’t Buying
Trouble Digesting Milk
Let’s face it – many Chinese people simply can’t comfortably digest milk. Studies show that lactase deficiency affects about 38.5% of Chinese children aged 3-5, jumping to a whopping 87% in older kids. This biological reality means milk has never been a staple in Chinese diets.
Declining Birth Rates
China’s birth rate has fallen, dropping from 13.03 births per thousand people in 2013 to just 6.39 in 2023. This hits infant formula sales hard – historically a major driver for dairy imports.
There was a small bump in 2024 during the “Year of the Dragon” (considered lucky in Chinese culture), but that’s a blip in the long-term downward trend.
Economic Challenges
China’s economy struggles with real estate problems, high youth unemployment, and weak consumer confidence. As USDEC notes: “China’s economy continues to be challenged on multiple fronts—a real estate crisis; elevated youth unemployment; underfunded local governments; deflation; and disappointing GDP growth—not to mention potential fallout from trade battles with the U.S.”
When money’s tight, dairy products are often the first thing cut from shopping lists.
The Competitive Landscape: Why New Zealand Wins
New Zealand’s Duty-Free Advantage: As of January 1, 2024, all New Zealand dairy products enter China completely duty-free. This gives Kiwi producers roughly $350 million in annual tariff savings compared to U.S. suppliers.
Dominant Market Position: New Zealand commands a 46% share of China’s dairy import market. Their exports to China jumped significantly in late 2024, especially milk powder, butter, and cheese.
U.S. Export Decline: Meanwhile, U.S. dairy exports to China tanked in 2024, falling to $584 million – the lowest since 2020. Overall volume dropped 9%, according to USDEC.
Bottom Line: New Zealand’s free trade advantage is practically impossible to overcome without significant policy changes. Any import opportunities created by China’s production decline will benefit New Zealand, not U.S. producers.
The Trade War Impact: 84% of Tariffs Close the Door
The trade relationship between U.S. dairy and China has gone from bad to worse. Here’s how quickly things escalated:
Tariff Timeline:
February 1, 2025: U.S. slaps 10% tariff on all Chinese imports
March 3, 2025: U.S. increases tariff to 20%
March 4, 2025: China announces 10% retaliatory tariff on U.S. dairy (effective March 10)
April 2, 2025: U.S. imposes additional 34% “reciprocal” tariff
April 4, 2025: China matches with a 34% retaliatory tariff (effective April 10)
April 9, 2025: U.S. increases reciprocal tariff to 84%
April 9, 2025: China immediately matches with an 84% retaliatory tariff (effective April 10)
“China will impose a 10% tariff on US dairy products starting March 10 as the trade war intensifies,” reported The Bullvine in early March.
As of today (April 9, 2025), the U.S. has just announced an increase of its tariff on China from 34% to 84%, with China immediately matching. Starting tomorrow, virtually all U.S. dairy products entering China will face an additional 84% tariff on top of existing rates – effectively slamming the door shut on exports.
Quick Takeaways for Dairy Farmers
Small Operations: Focus on domestic specialty markets; consider joining cooperatives with diversified export portfolios
Medium Operations: Explore USDA Market Access Program funding for new market development in Southeast Asia and Latin America
Large Operations: Evaluate product mix to target markets less impacted by tariffs; consider joint ventures with partners in FTA countries
Bottom Line for Dairy Producers
The brutal truth? U.S. dairy producers shouldn’t expect any meaningful export opportunities to China shortly. The triple whammy of sky-high tariffs, weak Chinese consumer demand, and competition from duty-free suppliers like New Zealand create a perfect storm that effectively locks us out of the market.
3 Steps for Farmers:
Explore USDA Market Access Program grants for export market development (applications due June 14, 2025)
Contact your co-op or industry association about market diversification strategies
Look beyond China to Mexico, Southeast Asia, and the Middle East/North Africa markets
This trade war highlights why putting all your eggs in one export basket is risky. The most brilliant move now is to diversify your markets and focus on regions where U.S. dairy still has competitive advantages.
Join over 30,000 successful dairy professionals who rely on Bullvine Daily for their competitive edge. Delivered directly to your inbox each week, our exclusive industry insights help you make smarter decisions while saving precious hours every week. Never miss critical updates on milk production trends, breakthrough technologies, and profit-boosting strategies that top producers are already implementing. Subscribe now to transform your dairy operation’s efficiency and profitability—your future success is just one click away.
EXECUTIVE SUMMARY: President Trump’s tariffs have ignited a global trade war with dire consequences for the U.S. dairy industry, risking .6B in farm revenue and triggering retaliatory measures from key markets like China and Canada. Mid-sized farms could lose up to $56K annually, while organic producers face soaring feed costs. Industry leaders remain divided, with some advocating for tariffs as leverage against trade barriers, while farmers scramble to secure contracts and diversify exports. The article outlines actionable survival strategies, including USDA programs and feed efficiency investments, as the sector balances uncertainty with cautious optimism for long-term trade reforms.
KEY TAKEAWAYS:
$16.6B at Risk: Retaliatory tariffs threaten nearly a quarter of U.S. dairy exports, with Mexico and China as top vulnerable markets.
Farm-Level Crisis: Medium-sized operations face income drops up to $56K/year; organic feed costs may spike $1,200/month.
Survival Playbook: Lock pre-tariff contracts, leverage USDA programs, and target emerging Southeast Asian markets.
Industry Divide: Leaders split on tariffs as tools for trade reform vs. immediate economic harm to farmers.
Long Game: Strategic adaptations like feed-efficient breeds and policy engagement could determine sector resilience.
The U.S. dairy industry faces unprecedented challenges as President Trump’s sweeping tariff policies take effect, threatening .2 billion in annual exports and reshaping the global trade landscape. With retaliatory measures from key trading partners looming, dairy farmers and processors must navigate market volatility, rising input costs, and potential long-term disruptions to established export channels.
Tariff Tensions Spark Global Dairy Trade War
President Trump’s announcement of a baseline 10% tariff on all imports, with higher targeted rates for specific countries, has sent shockwaves through the dairy sector. China and Canada, two of America’s top dairy export destinations, have already imposed retaliatory tariffs. China has placed 10% of its duties on some milk products, while Canada’s package includes 25% tariffs on American cheese, butter, and dairy spreads.
The timing couldn’t be more precarious for U.S. dairy, with Mexico, China, and Canada among its top export markets:
Top U.S. Dairy Export Markets (2024)
Volume (Metric Tons)
% of Total Exports
Value (USD Millions)
Mexico
576,000
24.8%
$1,840
Southeast Asia
395,000
17.0%
$1,320
China
311,000
13.4%
$970
Canada
246,000
10.6%
$810
Middle East/North Africa
172,000
7.4%
$580
Dairy Industry Voices: Mixed Reactions to Tariff Strategy
While some industry leaders see potential leverage in the tariffs, others warn of devastating consequences. Gregg Doud, President and CEO of the National Milk Producers Federation, cautiously supports the measures:
“Tariffs can be a useful tool for negotiating fairer terms of trade. To that end, we are glad to see the administration focusing on long-time barriers to trade that the European Union and India have imposed on our exports.”
“We’re facing a double challenge — lower prices and increasing costs. We can’t simply raise our prices at the market because all our expenses are increasing, leaving us in a difficult position.”
Economic Impact: From Farm to Market
The tariffs are expected to have severe economic consequences:
Potential farm-gate revenue losses of up to $16.6 billion due to trade tensions.
A medium-sized farm in Wisconsin with about 250 cattle could decrease income by up to $56,000 per year.
For organic dairy farmers, grain expenses could increase by $1,200 monthly due to tariffs on Canadian imports.
CME dairy futures have already reacted, with milk futures down 12% since February. The USDA has lowered its 2025 milk production forecast to 227.2 billion pounds, down 0.8 billion from previous estimates.
Dairy Survival Checklist: Strategies for Weathering the Storm
Secure pre-tariff contracts where possible to lock in more favorable terms.
Leverage USDA Dairy Margin Coverage programs to protect against price volatility.
Explore emerging markets in Southeast Asia to diversify export destinations.
Conduct a thorough audit of feed inputs and export contracts to stress-test 2025 margins.
Consider investing in feed-efficient breeds to mitigate rising input costs.
Looking Ahead: Uncertainty and Opportunity
While the immediate outlook appears challenging, some industry experts see potential benefits. The National Milk Producers Federation and U.S. Dairy Export Council have expressed hope that targeted tariffs could help address longstanding trade barriers, particularly with the EU and Canada.
Krysta Harden, President and CEO of the U.S. Dairy Export Council, states:
“President Trump’s commitment to addressing certain unfair and harmful trade policies that American dairy farmers and manufacturers have long faced in the global marketplace can yield positive results if the tariffs announced today are used as leverage to remedy the various trade barriers facing our exporters.”
Adaptability and strategic planning will be key as the dairy industry navigates these turbulent waters. Farmers and processors must stay informed, leverage risk management tools, and actively engage with policymakers to ensure their voices are heard in ongoing trade negotiations.
The stakes have never been higher for U.S. dairy. Will these tariffs lead to more equitable global trade or trigger a costly market disruption? Only time will tell, but one thing is sure: American dairy farmers’ resilience and innovation will be tested in the months and years ahead.
How U.S. Farmers Could Benefit from Canada’s Trade Barriers Learn how Trump’s reciprocal tariffs on Canadian dairy could reshape trade dynamics, potentially benefiting U.S. farmers while exposing Canadian producers to increased competition.
Join the Revolution!
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Trump’s tariff gamble: Dairy sees trade war leverage while grain fears collapse. Will new tariffs crack EU cheese barriers or spark Chinese retaliation?
EXECUTIVE SUMMARY: President Trump’s new tariffs on major trade partners have divided agriculture, with dairy leaders cautiously supporting the measures as potential leverage against long-standing EU cheese restrictions (blocking $168M in exports) and Canada’s quota system (where U.S. exports fill less than 30% of allowed volumes). However, grain producers warn of permanent market loss to Brazil, citing 2018’s $25B trade war damage. The tariffs target EU GIs, India’s lactose taxes, and China’s retaliatory risks, with dairy advocating for swift negotiations to dismantle barriers. While the strategy could pressure reforms, farmers face uncertainty as implementation begins today.
KEY TAKEAWAYS:
Canada’s dairy paradox: 200%+ tariffs exist but apply only if exports exceed quotas—a scenario that’s never occurred due to systemic barriers.
EU’s $168M cheese blockade: Geographical Indications block U.S. products from using names like “feta,” costing millions annually.
China gamble: 34% tariffs risk retaliation in America’s third-largest dairy export market ($584M), already down 12% YoY.
Sector divide: Dairy backs tariffs as negotiation tools; grain growers fear irreversible market loss, per Purdue’s Ag Barometer.
TRQ reality: Complex tariff-rate quotas govern global dairy trade, with most countries failing to fill allocated volumes.
As President Trump’s newly announced tariffs are set to take effect tomorrow, dairy industry leaders are expressing cautious optimism that these measures could help address longstanding trade barriers that have hindered U.S. dairy exports. The tariff plan, which includes both a baseline 10% duty on all imports and higher targeted rates for specific countries, is being viewed by some dairy representatives as a potential lever to create more equitable trade conditions.
Breaking Down Trump’s Bold Tariff Strategy for Dairy Markets
President Donald Trump unveiled his tariff plan during a “Make America Wealthy Again” event at the White House Rose Garden, announcing a universal 10% tariff on all imports beginning April 5, 2025, with additional targeted tariffs on countries with which the U.S. has significant trade deficits starting April 9. The higher rates include 34% for China, 20% for the European Union, and targeted percentages for countries including Vietnam (46%), Japan (24%), and India (26%).
Unlike some agricultural sectors expressing concern, dairy industry leaders offered measured support for the administration’s approach. Gregg Doud, President and CEO of the National Milk Producers Federation (NMPF) framed the tariffs as potentially beneficial for U.S. dairy producers.
“Tariffs can be a useful tool for negotiating fairer terms of trade,” Doud stated. “We are glad to see the administration focusing on long-time barriers to trade that the European Union and India have imposed on our exports.”
Krysta Harden, President and CEO of the U.S. Dairy Export Council (USDEC), echoed this sentiment, emphasizing that a “firm hand and decisive approach” is particularly needed with the European Union and India “to correct their distortive trade policies and mistreatment of American agriculture.”
The USMCA Paradox: How Canada Blocks U.S. Milk Despite “Zero” Tariffs
President Trump has specifically highlighted Canadian dairy policies as problematic, claiming Canada imposes tariffs of 250-270% on U.S. dairy products. While these high rates do exist on paper, the reality is more complex and often misrepresented.
These triple-digit tariffs would only apply if U.S. exports exceeded predetermined quota thresholds established under the United States-Mexico-Canada Agreement (USMCA), which Trump himself negotiated during his first term. Below these quotas, American dairy sales to Canada face zero tariffs.
The critical fact often overlooked is that U.S. dairy exports have never come close to reaching these quota limits. For dairy products subject to a quota year tariff, the average fill rate as of March 2025 was only 21.24%. In practice, this means “these tariffs are not actually paid by anyone,” according to agricultural economists.
“We’ve never hit 50% of our tariff-free milk quota. Canada’s system is designed to look open while keeping U.S. products out.”
Becky Rasdall Vargas, IDFA Senior VP of Trade Policy
Dairy Product
TRQ Year Basis
2024 Fill Rate
March 2025 Fill Rate
Cheese & Curd
Calendar
18%
14%
Skim Milk Powder
Quota (Aug-Jul)
32%
23%
Fluid Milk
Calendar
29%
19%
Butter
Quota (Aug-Jul)
41%
27%
The real issue, according to U.S. dairy representatives, lies in Canada’s implementation of the quota system. Becky Rasdall Vargas, senior vice president of trade and workforce policy at the IDFA, argues that “Canada imposes unfair barriers that make it increasingly difficult for U.S. products to enter the Canadian market”.
“Our complaint is we’re not able to get anywhere near the quota cap, even though we have buyers who tell us they would like to bring in our product,” Rasdall Vargas explained.
USMCA Promised Big Gains for Dairy—But Delivery Falls Short
The USMCA established significant growth in market access for U.S. dairy exports to Canada, with TRQ volumes scheduled to increase substantially over the agreement’s implementation period.
Product Category
Year 1 TRQ
Year 6 TRQ
Year 19 TRQ
Growth Mechanism
Cheese
10,416 MT
15,624 MT
17,860 MT
+25% Y3, +20% Y6, +1% annually
Skim Milk Powder
5,000 MT
7,500 MT
8,575 MT
+50% Y2, +1% annually
Fluid Milk
7,000 MT
10,500 MT
12,005 MT
+33% Y3, +1% annually
Butter
3,000 MT
4,500 MT
5,145 MT
+50% Y2, +1% annually
Under CUSMA (the Canadian term for USMCA), butter TRQs increased by 25% in the 2023/24 dairy year. With an 81.3% fill rate, this year’s rate is lower than last year’s at 97%, indicating some challenges in fully utilizing the expanded market access.
$168 Million Lost: How EU Cheese Rules Block American Exports
The relatively moderate 20% tariff on European Union goods reflects a strategic approach to a complex trade relationship. According to Doud, this rate is “a bargain for the EU considering the highly restrictive tariff and nontariff barriers the EU imposes on our dairy exporters.”
One of the most contentious issues between U.S. and EU dairy trade involves Geographical Indications (GIs), which the EU uses to protect regional food names. These designations prevent U.S. cheesemakers from labeling their products as “feta” or “gorgonzola” when exporting to EU markets, as these terms are reserved for regionally produced cheeses.
The EU’s GI restrictions effectively “erase American products from store shelves overseas,” as Krysta Harden of USDEC has noted, blocking $168 million in potential U.S. cheese exports in 2024 alone.
“If Europe retaliates against the United States, we encourage the administration to respond strongly by raising tariffs on European cheeses and butter,” Doud stated, signaling the industry’s support for a tough stance on this issue.
China’s $584 Million Dairy Market at Risk: Will Retaliation Follow?
The highest targeted tariff rate—34% on Chinese goods—raises significant questions for U.S. dairy exports to what has become America’s third-largest dairy export market, worth $584 million in 2024. U.S. dairy exports to China declined by 12% year-over-year in 2024, reaching their lowest level since 2020, a trend that could be exacerbated by new trade tensions.
China has previously imposed retaliatory tariffs on U.S. dairy imports in response to earlier Trump-era tariffs, with dairy products facing a 10% duty. During the 2018 trade war, these retaliatory measures cost dairy farmers $1.5 billion in lost revenue. With the new 34% U.S. tariff set to take effect April 9, there is concern about potential escalation.
“China will take necessary measures to firmly safeguard its legitimate interests against these WTO-violating tariffs.”
Guo Jiakun, Chinese Foreign Ministry Spokesperson
Chinese officials have already signaled their opposition to the new tariffs. Foreign Ministry Spokesperson Guo Jiakun stated that the measures “seriously violate WTO rules” and promised that “China will resolutely take countermeasures to safeguard its legitimate interests”.
The Trade Barrier Paradox: U.S. Import Quotas Remain Unfilled Too
While much attention focuses on barriers to U.S. exports, it’s worth noting that many countries face challenges accessing the U.S. market as well. Current data shows varying utilization rates for dairy TRQs established under U.S. free trade agreements:
Trade Partner
TRQ Type
2024 Utilization
Key Barrier
Canada
Cheese
1%
Quota allocation complexity
EU
Butter
44%
GI restrictions
Mexico
SMP
8%
Section 232 tariffs
This data from the USDA Dairy Import Circular shows that trade barriers can flow in both directions, with complex quota systems sometimes limiting the effectiveness of market access provisions.
“We’re Handing China to Brazil”: Grain Farmers Fear Permanent Market Loss
While dairy industry representatives see potential benefits in Trump’s tariff strategy, grain producers have expressed significant concerns. Chase Dewitz, who operates a large farming operation in North Dakota, worries about permanent market loss.
“We’re handing China to Brazil,” warns Dewitz, reflecting grain growers’ fears of losing export markets. “I think there’s going to be some pain here for a while, and the biggest thing is these export markets.”
During the 2018 trade war with China, U.S. agriculture experienced more than $25 billion in losses. The United States has yet to fully recover its former market share of soybean exports to China, the world’s largest buyer of the commodity.
“Tariffs tear us apart—raising input costs while crushing commodity prices. This isn’t trade policy; it’s economic vivisection.”
Vance Ehmke, Kansas Farmer (6th Generation)
“These tariffs are just absolutely bad news,” said Vance Ehmke from the western Kansas farm his ancestors homesteaded in 1885. “They cause the prices for everything that we buy to go up, and the price for everything that we sell to go down. I mean, it is being economically drawn and quartered”.
Tariff Rate Quotas Explained: Why the “Milk Tank” Analogy Matters
Think of Tariff Rate Quotas (TRQs) like a milk tank—fill it tax-free, but overflow costs steeply. Both the U.S. and Canada use this system for dairy products, allowing a certain number of imports at low or zero tariffs, with significantly higher rates applied to imports exceeding these quotas.
For example, while U.S. dairy exports to Canada face potential tariffs of 241-298.5% if they exceed quota limits, these exports have never reached even 50% of their tariff-free allocation. Similarly, Canadian butter exported to the U.S. faces no tariffs under quota thresholds but would be subject to over-quota tariffs of about 24-39%.
Understanding these mechanisms is crucial for dairy producers navigating international markets and evaluating the potential impact of Trump’s new tariff strategy.
Will Your Dairy Operation Benefit or Suffer Under New Tariffs?
As the April 5 implementation date approaches tomorrow, dairy producers should consider how these tariffs might affect their specific operations. Would a 34% tariff on Chinese imports benefit your bottom line? Or would retaliatory bans on milk powder erase your profits?
The contrasting reactions between dairy and grain sectors highlight the diverse impacts trade policies can have across different agricultural commodities. While dairy organizations see an opportunity to leverage tariffs for negotiations with problematic partners like the EU, India, and Canada, they also emphasize the importance of quickly resolving tensions with constructive trading partners.
“Through productive negotiations, this administration can help achieve a level playing field for U.S. dairy producers by tackling the numerous tariff and nontariff trade barriers that bog down our exports,” Doud stated.
Tariffs as Leverage: Strategic Tool or Economic Self-Harm?
As the dairy industry navigates the complex landscape of international trade, the response to Trump’s tariff announcement reflects a strategic calculation: potential short-term disruption weighed against the possibility of addressing persistent barriers to U.S. dairy exports.
“Every farmer says trade needs fixing—until it affects their bottom line. Well, buckle up: this storm will hit us all.”
James Mintert, Purdue Ag Economist
“Broad and prolonged tariffs on our top trading partners and growing markets will risk undermining our investments, raising costs for American businesses and consumers, and creating uncertainty for American dairy farmers and rural communities,” warns Becky Rasdall Vargas of the IDFA.
The dairy sector appears poised to support targeted use of tariffs while advocating for swift negotiations to expand export opportunities and eliminate both tariff and non-tariff barriers that have limited U.S. dairy’s global competitiveness. As implementation begins tomorrow, the industry will be watching closely to see whether these tariffs serve as effective negotiating tools or trigger costly trade conflicts.
Join over 30,000 successful dairy professionals who rely on Bullvine Daily for their competitive edge. Delivered directly to your inbox each week, our exclusive industry insights help you make smarter decisions while saving precious hours every week. Never miss critical updates on milk production trends, breakthrough technologies, and profit-boosting strategies that top producers are already implementing. Subscribe now to transform your dairy operation’s efficiency and profitability—your future success is just one click away.
American cheese shatters the billion-pound export barrier as global demand surges! With 17% growth pushing exports past 508,000 metric tons and the U.S. crowned the #1 cheese supplier, discover how record-breaking dairy exports reshape farm economics and why the world can’t get enough of what your cows produce.
EXECUTIVE SUMMARY: U.S. dairy exports have reached unprecedented heights, with cheese shipments breaking the billion-pound barrier (508,808 metric tons) and total export values hitting $8.2 billion in 2024 – the second-highest ever. While total export volume dipped slightly (-0.4%), the industry’s strategic shift to higher-value products like cheese has created additional value for producers. With exports representing 18% of U.S. milk production and massive cheese processing expansion underway, American dairy farms producing high-component milk are uniquely positioned to benefit from this global demand surge.
KEY TAKEAWAYS:
U.S. cheese exports smashed records, reaching 508,808 metric tons in 2024 (17% year-over-year growth)
The United States is now the #1 cheese supplier to the world, with exports exceeding the billion-pound mark for the first time
Overall, the value of dairy exports increased by 2% to $8.2 billion despite a slight 0.4% decline in volume.
Mexico remains the top U.S. dairy customer, with exports growing 7% in 2024
More than 450,000 metric tons of new cheese production capacity coming online between 2023-2026
Exports now represent 18% of U.S. milk production, up from previous years
Latin America showed exceptional growth, with record values for Mexico, Central America, and South America
As milk trucks rumble across frost-covered driveways before dawn, the familiar hum of their engines signals not just another local delivery but the beginning of a global journey. The sweet, grassy aroma of fresh milk that filled your bulk tank this morning might soon become cheese savored by families in Mexico City, Tokyo, or Seoul. The first months of 2025 have confirmed what industry insiders call a transformative shift in U.S. dairy’s position on the world stage – with American cheese now dominating international markets at record volumes.
American cheese exports reached 508,808 metric tons in 2024, making the U.S. the world’s leading cheese supplier. Processing plants across the country are working at capacity to meet international demand.
U.S. CHEESE CRUSHES EXPORT RECORDS: FIRST-EVER BILLION-POUND MILESTONE
American cheese has officially conquered global dinner tables in a way that would make our grandfathers’ jaws drop. U.S. cheese exports reached a staggering 508,808 metric tons (1.12 billion pounds) in 2024, a 17% jump from the previous record. The sharp, nutty aroma of aged cheddar and the creamy reliability of American mozzarella are winning international fans at an unprecedented rate.
Think about it this way: if you lined up all the cheese America exported last year, it would stretch from New York to Los Angeles and back – twice. Approximately 45 billion grilled cheese sandwiches worth of dairy protein are feeding families worldwide.
Throughout 2024, the U.S. leveraged competitive pricing, consistent quality, and strong production capacity to position itself as the world’s leading cheese supplier. This global leadership directly translated to more vigorous milk checks for farmers, providing critical revenue streams when input costs for feed, labor, and compliance remained stubbornly high.
“The United States is already the No. 1 cheese supplier to the world, and we know we can strengthen our position in the years ahead,” noted Krysta Harden, president and CEO of the U.S. Dairy Export Council. This statement isn’t just industry optimism – it’s backed by complex numbers showing American cheese consistently winning market share from European and Oceanian competitors.
MASSIVE PROCESSING EXPANSION CREATES NEW MILK MARKETS
The distinctive whine of construction equipment at new cheese plant sites represents music to dairy farmers’ ears. The tang of freshly welded stainless steel and the rhythmic hum of new pasteurizers being tested signal more than industrial development – they represent crucial new markets for your milk.
More than 450,000 metric tons of new U.S. cheese production capacity will come online between 2023 and 2026, creating critical outlets at a time when domestic consumption alone cannot absorb increasing production.
Your dairy operation is increasingly connected to global markets, with exports accounting for 18% of U.S. milk production. Every tanker leaving your farm potentially contributes to America’s export success.
For dairy farms in regions like the Upper Midwest, Southwest, and Idaho, where these plants are growing, the investment signals long-term confidence in American dairy’s future. Manufacturers wouldn’t be pouring millions into stainless steel if they weren’t betting on your ability to supply high-quality milk for decades.
The timing couldn’t be better, as component levels in American milk continue their upward march. Today’s Holstein herds regularly produce milk testing above 4.0% fat and 3.2% protein, which would have seemed impossible twenty years ago. These higher component concentrations translate directly to cheese yield, creating a win-win for processors and the farmers supplying them.
COMPONENT ENHANCEMENT: YOUR STRATEGY FOR EXPORT PROSPERITY
The global cheese boom means your focus on components has never been more valuable. Farms producing milk with above-average butterfat and protein are capturing premium prices as processors compete for milk that yields more cheese per vat.
What practical steps can boost your components and position your operation for export market success?
Nutritionists point to several evidence-based strategies: increasing the forage-to-concentrate ratio (particularly with high-quality corn silage), precisely balancing amino acids, and ensuring adequate, effective fiber to maintain butterfat. Leading herds also make genetic selection decisions heavily weighted toward component traits, recognizing that minor percentage improvements multiply millions of pounds of lifetime production.
John Wilson, a third-generation Wisconsin dairy farmer, implemented these strategies and saw dramatic results. “We increased our components by focusing on cow comfort, forage quality, and genetics. Over three years, our fat test increased from 3.8% to 4.2%, and we’re capturing a premium of almost per hundredweight,” Wilson explains as he walks through his milking parlor where the rhythmic pulse of vacuum pumps provides a steady backbeat to his morning routine. “With exports driving cheese demand, these components are our ticket to staying profitable.”
While cheese export growth dominates headlines, the overall dairy export landscape shows a more complex picture directly impacting your bottom line. Total U.S. dairy exports slipped by 0.4% in milk solids equivalent terms during 2024, primarily due to weakness in nonfat dry milk/skim milk powder (NFDM/SMP) markets.
NFDM/SMP exports faced significant challenges, with December 2024 volumes plunging 23% (14,992 metric tons) to 49,565 metric tons – the first time monthly sales fell below 50,000 since July 2019. This powder performance dip meant milk could have found international homes instead of pressured domestic markets.
U.S. NFDM/SMP exports declined 8% for the entire year, mainly due to reduced U.S. production, limited available supply, and pricing issues that favored competitors. The contrast between thriving cheese exports and struggling powder markets highlights why diversified export strategies matter for industry stability.
Despite the volume dip, the value of U.S. dairy exports reached $8.2 billion in 2024 – a 2% increase ($202 million) and the second-highest total ever, trailing only 2022’s $9.7 billion. This value growth reflects the industry’s strategic shift toward higher-value products like cheese, creating more dollars per hundredweight for producers.
Product Category
Volume (Metric Tons)
Year-over-Year Change
Cheese
508,808
+17%
NFDM/SMP
Year total not specified
-8%
Total Dairy Exports (MSE)
Not specified
-0.4%
Total Export Value
$8.2 billion
+2% ($202M)
Source: U.S. Dairy Export Council, 2025
MEXICO & LATIN AMERICA: THE MARKETS DRIVING YOUR MILK CHECK
When you watch tank trucks pull away from your farm, the diesel exhaust mingling with the sweet scent of fresh milk, you might not realize how many are ultimately bound for Mexican dinner tables. Latin America has emerged as the foundation of American dairy export success, with Mexico alone purchasing $2.47 billion in U.S. dairy products in 2024.
As you sip your morning coffee, farmers across Mexico are incorporating U.S. cheese into breakfast dishes – the sizzle of melting cheese in quesadillas and the stretch of mozzarella in countless dishes, driving a 7% increase in exports to our southern neighbor last year. This growth isn’t just happening in Mexico – U.S. dairy export volume gained across South America (+6%) and Central America, with countries like Costa Rica, Guatemala, and El Salvador all setting new import records.
Mexico’s growing appetite for U.S. dairy drove $2.47 billion in exports in 2024, supporting milk prices for American farmers. The popularity of cheese-based dishes throughout Latin America creates steady demand for U.S. dairy products.
What is the significance of your operation? This regional strength creates crucial outlets for American milk production that would otherwise depress domestic prices. Every semi-truck of cheese crossing the southern border represents milk that doesn’t weigh down your local market.
“I’ve completely changed how I think about our market,” says Maria Hernandez, whose 850-cow operation in California produces high-component milk primarily destined for export markets. Standing in her feed alley as the distinctive sound of mixer wagons and the earthy scent of TMR fill the air, she continues, “We’re essentially feeding families in Mexico City and Lima now, not just our domestic market. That global connection has made me more focused on consistency and quality than ever.”
Market
Export Value (2024)
Mexico
$2.47 Billion
Canada
$1.14 Billion
Total Value to All Markets
$8.2 Billion
Source: International Dairy Foods Association, 2025
NAVIGATING EXPORT HEADWINDS: TRADE TENSIONS AND MARKET VOLATILITY
The road to export growth isn’t without potholes that could jolt your operation’s planning. U.S. dairy exporters faced significant headwinds in 2024, including Chinese demand contraction for the third straight year and intensified competition from New Zealand and European suppliers aggressively targeting traditional U.S. export destinations.
U.S. dairy exports to China reached their lowest annual total since 2020, a troubling trend given China’s critical market for American whey products used in its massive pork industry. Meanwhile, Oceanian suppliers have reworked their product mix to target Latin American and Southeast Asian markets, driving margin compression in regions where U.S. dairy previously enjoyed more substantial positions.
Trade policy uncertainty adds another layer of complexity to your farm planning. In early 2025, President Donald Trump agreed to a 30-day pause on tariff threats against Canada and Mexico. Since these nations represent more than 40% of U.S. dairy exports, any tariff implementation could trigger retaliatory measures that disproportionately target agricultural products – potentially stranding significant milk volumes in domestic markets and pressuring prices.
How should your farm navigate these uncertainties? Financial advisors recommend maintaining higher cash reserves than historical norms, carefully evaluating major capital expenditures, and considering risk management tools like forward contracting and futures markets to lock in profitability during favorable windows.
YOUR FARM’S STAKE IN THE EXPORT BOOM: POSITIONING FOR PROFIT
As morning fog lifts from your pastures and the first rays of sunlight catch the steam rising from cows’ breath in the cool morning air, the international connections of your operation become increasingly apparent. Approximately one day’s milk produced on America’s dairy farms each week is exported – roughly 18% of all production. Your contribution to feeding the world has never been more direct or economically significant.
Expanding processing capacity proves that your future is increasingly tied to global markets. New cheese plants online between 2023 and 2026 represent massive bets on American dairy’s international competitiveness. These facilities wouldn’t exist without confidence in your production capacity and the world’s appetite for what your cows produce.
For forward-thinking producers, this export-driven future demands strategic decisions. Component enhancement provides immediate returns, but other factors increasingly influence your competitiveness in export-focused processing:
Milk with superior microbiological quality enjoys longer shelf-life in international transport
Consistent component levels throughout the year (avoiding seasonal swings) create processing efficiencies
Sustainability credentials increasingly influence purchasing decisions, particularly in premium markets
On-farm practices that minimize heat-sensitive protein damage produce superior yields in high-heat cheese applications typical in export markets.
“We’ve shifted our management to focus on what I call ‘exportable milk quality,'” explains Thomas Johnson, whose 450-cow Michigan dairy consistently earns quality premiums. The crisp smell of sanitizer and the gentle whoosh of automatic detachers provide the backdrop as he monitors the milking process. “Beyond basic components, we’ve reduced our somatic cell count below 100,000, implemented cooling that gets milk below 38°F within 30 minutes of harvest, and documented our carbon footprint reduction. These steps directly translate to premiums from processors serving export markets.”
Metric
Value
Total U.S. Dairy Export Value (2024)
$8.2 Billion
Year-over-Year Value Increase
$202-223 Million
Percentage of U.S. Milk Production Exported
18%
Jobs Supported by U.S. Dairy Industry
3.2 Million
Economic Contribution to U.S. Economy
$800 Billion
Sources: U.S. Dairy Export Council, International Dairy Foods Association, 2025
THE FUTURE IS GLOBAL: WHY EXPORTS MATTER MORE THAN EVER
The billion-pound cheese milestone represents more than just a number – it symbolizes American dairy’s transformation from a domestic industry to a global powerhouse. This global connection provides crucial stability for your operation as domestic consumption patterns evolve and production efficiency continues improving.
As you walk through your barn today, the familiar sounds of cows crunching feed and the rhythmic pulse of milking equipment serve as the backdrop to an increasingly global enterprise. The milk your cows produce increasingly travels to dinner tables your grandparents couldn’t have imagined reaching. From Mexican pizza toppings to Japanese cheese boards, American dairy products have become essential ingredients in global cuisine.
“Our industry is poised to become the world’s leading supplier of dairy products thanks to the resilience and innovation of the American dairy industry,” said Michael Dykes, president and CEO of the International Dairy Foods Association. “Overall, U.S. dairy exports are performing well, but we can do more. With new trade agreements that remove obstacles and increase market access, we wouldn’t just break records – we would redefine the global dairy landscape for decades to come.”
The path forward requires both individual farm adaptation and collective industry action. Your focus on components, quality, and sustainability positions your operation for success while industry organizations work to secure favorable trade terms and develop new markets. This partnership between progressive producers and forward-thinking processors has transformed American dairy from a regional industry into a global powerhouse – with your farm playing a crucial role in feeding a hungry world.
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A 19-year tariff phaseout has unlocked Central America’s dairy market, but melting ice cream and EU rivals threaten gains. Will farmers seize the moment or stall?
Summary:
The CAFTA-DR trade deal, finalized after nearly 20 years, boosted U.S. dairy exports from $40 million pre-2006 to $441 million by 2025, thanks to the complete removal of tariffs. This expansion has made Central America an essential market for American dairy, particularly in cheese, milk powders, and whey. However, exporters still face non-tariff challenges like high port fees in Nicaragua, approval delays in El Salvador, and competition from the EU and New Zealand. As U.S. dairy farmers adapt to these hurdles, they must invest in technology and forge co-op partnerships to stay competitive.
Key Takeaways:
U.S. dairy exports surged to $441 million following the full implementation of the CAFTA-DR trade deal.
Cheese exports dominate the CAFTA-DR dairy trade, leading with over half of the market share.
While tariffs have been eliminated, non-tariff barriers such as high port fees and lengthy approval processes remain challenges.
The CAFTA-DR region is now the third-largest market for U.S. dairy exports, emphasizing its significance.
Global competition is intensifying, with rival trade deals potentially impacting U.S. market share.
Dairy farmers must adapt strategies based on farm size to leverage export opportunities and remain competitive.
Future growth will depend on expanding into new markets, adopting technology, and strategic policy negotiations.
Small and medium farms may rely on cooperative agreements to achieve export success.
The demand for advanced technology, such as blockchain for product tracking, may pose financial challenges for smaller farms.
Six CAFTA-DR countries fueled a 1,117% surge in U.S. dairy exports since 2006. Central America now ranks as the third-largest market for American milk, cheese, and whey
At midnight on January 1, 2025, U.S. dairy tariffs vanished across Central America under the fully implemented CAFTA-DR trade deal, capping a 19-year phaseout that supercharged exports from $40 million pre-2006 to $441 million today. Cheese shipments charge $238 million annually, with milk powders ($120M) and whey ($35M) rounding out a market critical to absorbing America’s growing milk surplus.
Category
2006 Exports
2023 Exports
2025 Projections
Growth (%)
Cheese
$34m
$238m
$264m
+595%
Milk powders
$3.2m
$120m
$135m
+3,650%
Whey products
$2.8m
$35m
$48m
+1,150%
Total
$40m
$441m
$527m
+1,217%
How CAFTA-DR Reshaped Dairy Trade
The agreement, negotiated by the National Milk Producers Federation (NMPF) and the U.S. Dairy Export Council (USDEC), began lowering tariffs in 2006. This slow-but-steady approach allowed farmers to adapt:
Cheese exports surged by 595%, representing 54% of the CAFTA-DR dairy trade.
Milk powders supported Guatemala’s $2.1B bakery industry growth.
Whey became a staple in 72% of regional animal feed mixes
Jaime Castaneda from NMPF highlighted that the patience invested in CAFTA-DR led to a tenfold increase in dairy exports over the 19 years. “But tariffs alone aren’t magic—trust took 7,000 farm visits and 19 years of problem-solving.”
The payoff? Central America now ranks as the third-largest U.S. dairy export market, trailing only Mexico and Canada.
Zero Tariffs ≠ Smooth Sailing
Country
Tariff Status
Key Non-Tariff Barrier
Avg. Delay/Cost
El Salvador
0% since 2025
Facility registrations
72 days
Nicaragua
0% since 2025
Port inspection fees
+$42k/shipment
Guatemala
0% since 2025
Labeling disputes
21% rejections
Dominican Republic
0% since 2025
Quota administration
+$15k/compliance
However, despite the achievement, exporters now face new challenges:
Nicaragua’s 33% port fees increased shipment costs by $42,000 per shipment in 2024.
El Salvador’s 72-day approvals: Delays tripled since 2023
Canada’s retaliatory 25% border tax puts $578 million in annual U.S. dairy sales at risk due to Canada’s retaliatory 25% border tax.
“My ice cream melted in Costa Rican customs last month—$12,000 gone because paperwork ‘wasn’t shiny enough,’” says Idaho farmer Kaitlyn Voeller. USDEC’s Sarah Schmidt notes progress: “We’ve resolved 14 non-tariff barriers since July 2024, but it’s Whac-A-Mole. For every successful resolution, three new issues arise, creating a continuous cycle of challenges.”
Global Rivals Race Ahead
While U.S. farmers celebrate CAFTA-DR, competitors gain ground:
Competitor
Recent Trade Deal
U.S. Dairy Risk
EU
Japan FTA (87k-ton cheese quota)
\$1.3B loss by 2030
New Zealand
Vietnam 45% tariff cuts
Whey share ↓ 8%
Canada
Retaliatory 25% border tax
\$578M at risk
Sarah Schmidt warns that the EU is making agreements while the U.S. is still in discussions. “If we delay discussions with Kenya and Indonesia, we risk losing a generation of farms.”
Farm Size Dictates Strategy
With U.S. milk production hitting 227.2B pounds in 2025 (USDA), survival hinges on exports:
Small farms (50–500 cows): Pool through co-ops like Dairy Farmers of America’s new Guatemala contracts
Mid-sized (500–5K cows): Target niches like Honduras’ 340% rise in artisanal cheese demand
Large operations (5K+ cows): Invest in dedicated plants, e.g., Lupino Farms’ $220M Texas facility
Ben Strauss, an Ohio dairy farmer with 180 cows, credits his farm’s survival to the strategic decision to sell 40% of his milk to CAFTA-bound gouda cheese products. “But for $3,000 per heifer, margins vanish faster than morning fog for dairy farmers.”
Navigating the Future: The Crucial Decade for Milk’s Survival
The USDA aims to target new middle-class consumers in Asia by 2030 and capture a share of the 2.1 billion potential customers in CAFTA-adjacent markets like Colombia.
Tech Upgrades: Costa Rican buyers now require Blockchain shelf-life tracking systems, which cost $15K each. However, 83% of small farms cannot afford this upgrade.
Policy conflicts are escalating, with battles over Canada’s border tax, the EU’s Philippines dairy pact, and ongoing negotiations with Kenya and Indonesia.
Castaneda emphasizes that while CAFTA-DR marks a significant milestone, the crucial task now is to shape the future to prevent being overtaken by competitors proactively.
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.
Explore the record-breaking highs of U.S. dairy exports in September and what this means for the future. How will global price surges impact farmers?
Summary:
In September, U.S. dairy exports experienced significant growth, reaching $707 million, marking a six-month peak, as global demand for American dairy products surged. Cheese exports set a record with 86.3 million pounds, mainly due to a 19.4% increase in shipments to Mexico compared to the previous year. While nonfat dry milk and whey exports increased year-on-year, they fell short of the exceptional volumes in 2022. These trends have stabilized domestic markets by preventing oversupply and have driven up prices. Simultaneously, global dairy markets have strengthened, as evidenced by rising prices at the Global Dairy Trade auction, with most products, except lactose, hitting two-year highs. The U.S.’s position as a foremost dairy exporter reinforces its role as a critical player in the international dairy sector, distinguished by its products’ high quality and safety standards.
Key Takeaways:
U.S. dairy exports reached a six-month high in terms of value in September, driven by robust cheese shipments and significant sales growth to Mexico.
Despite some declines compared to previous years, nonfat dry milk and whey exports remain strong, helping manage U.S. inventory levels.
Market dynamics show increasing prices across dairy products at the Global Dairy Trade auction, except for lactose, which declined.
The boost in U.S. dairy exports positions the country as a competitive player in the global dairy market amid evolving trade patterns.
Industry stakeholders face opportunities and challenges as they adapt their strategies to leverage export growth while managing market volatility.
U.S. dairy exports, demonstrating remarkable resilience and strategic acumen, surged to an impressive $707 million in September, reaching the peak of the past six months. This remarkable milestone highlights the growing global demand for American dairy products and instills confidence in the strategic capabilities of the U.S. dairy industry. As the industry revels in this resurgence, a significant question emerges: What implications does this hold for the future trajectory of the U.S. dairy sector? As demand trends shift and markets continue to evolve, the impacts of this growth are extensive, encouraging a thorough examination of the long-term sustainability and adaptability of this upward trend. The record-setting statistics from September mark a crucial juncture for U.S. dairy, with extensive consequences that could redefine its global standing.
Riding the Wave: The U.S. Emerges as a Dairy Superpower
The global dairy market has been experiencing a significant uptrend characterized by rising prices and burgeoning demand. Several factors drive this escalation, including increased consumer desire for dairy products in emerging markets and the growing appetite for protein-rich foods. According to recent statistics, worldwide dairy consumption has surged, reflecting a 20% increase over the past five years, with a notable demand spike in Asia and Africa.
The USDA’s Global Agricultural Trade Systems (GATS) is pivotal in this dynamic landscape. GATS meticulously gathers data on U.S. agricultural exports, providing critical insights into trade volumes, destination markets, and price movements. This information is essential for stakeholders across the dairy supply chain, allowing them to make informed decisions and anticipate market shifts. GATS essentially serves as a compass, guiding the industry through the ever-changing currents of the global dairy market.
The United States stands out as a formidable force in the global dairy arena, not only as a leading producer but also as a significant exporter. U.S. dairy products, renowned for their quality and safety standards, are in high demand globally, with exports expanding by more than 31% over the last decade. American dairy exports have been instrumental in meeting the growing global demand, making the U.S. an indispensable player in the international dairy sector and a benchmark for other countries engaged in dairy trade.
From Farm to Fiesta: U.S. Cheese Exports to Mexico Surge
In September, the cheese export narrative took a robust turn. The United States marked a paradigm shift by dispatching an impressive 86.3 million pounds of cheese beyond its borders. This figure represents the highest September cheese export volume on record and a 6.8% increase compared to last year. This data, sourced from the USDA’s Global Agricultural Trade Systems, underscores the growing international demand for U.S. cheese, further propelled by strategic market maneuvers such as targeted marketing campaigns and competitive pricing strategies.
Mexico, a perennial powerhouse in U.S. cheese exports, continues to play a pivotal role, reflecting its burgeoning appetite for American dairy products. Shipments to this key partner surged by an extraordinary 19.4% from the preceding year, cementing Mexico’s status as a crucial market destination and showcasing its economic symbiosis with the U.S. dairy sector.
This uptick is manifold, effectively offsetting the deceleration in cheese sales to certain Asian territories. It exemplifies dynamic adaptability within export strategies focused on bolstering relationships with proximate neighbors. Such strategic targeting cultivates closer economic ties and supports broader trade balances amidst fluctuating global conditions.
Nonfat Dry Milk and Whey: Balancing Act for Market Equilibrium
The export performance of nonfat dry milk (NDM) and whey is multifaceted, presenting both hurdles and growth opportunities. Notably, exports of NDM surged by 15.6% compared to the previous year, breaking a new September record for shipments to Mexico. However, it is critical to highlight that current figures still lag behind those achieved in 2022 and 2021, reflecting a tapering off from earlier highs.
In contrast, whey product exports also exhibited a robust performance, marking a 15.3% increase over the September 2023 numbers. Despite this growth, these figures fell short of the unparalleled pace set in 2022. The deviation showcases the ebb and flow characteristic of international demand and market dynamics, directly affecting inventory management practices. However, the robust performance of whey product exports reassures the audience about the industry’s adaptability to market dynamics.
These export volumes have weighed heavily on U.S. milk powder and whey powder stockpiles. The industry successfully regulates inventory levels by maintaining a healthy outflow of products, preventing oversaturation. This capacity to keep stocks aligned with market demand is pivotal, as it directly influences commodity prices.
Ultimately, the positive uptick in exports helps rein in inventories, reflecting an agile response to fluctuating market conditions. As the CME spot market prices for whey and NDM edge close to their 2024 peaks, it becomes evident that balancing production output with export activities is critical to sustaining favorable price thresholds.
Market Momentum: Riding the Bullish Waves in Dairy Trading
The upward trajectory in market responses has been a significant focal point for analysts and dairy farmers alike. In September, the CME spot market and the Global Dairy Trade (GDT) auction reflected bullish tendencies. Whey and nonfat dry milk (NDM) prices rallied within a whisker of their 2024 highs on the CME spot market, showcasing remarkable resilience. This price strengthening indicates robust market demand, buoyed by substantial export volumes that have helped keep domestic inventories from ballooning.
The GDT auction provided another bullish narrative worldwide, with the GDT Index reaching its highest point since July 2022. This resurgence was echoed in the elevated prices for a spectrum of products, including anhydrous milkfat, which achieved its highest price since it started trading on the platform in January 2018. The price rallies for cheddar, whole milk powder, skim milk powder, and buttermilk powder underscore a market willing to pay a premium for these commodities, reflecting improved purchasing power and demand from international buyers.
For U.S. dairy farmers, these price trends are more than just a welcome reprieve; they signify a potential shift in economic conditions that could spur increased profitability. Farmers adept in adjusting their production strategies in response to such market signals stand to benefit significantly. As the market volatility continues to unfold, the ability of U.S. producers to adapt to these trends will be crucial in sustaining their competitive edge in the global dairy landscape.
The Bottom Line
U.S. dairy exports reached new heights in September, with cheese, nonfat dry milk, and whey setting notable records. This upward trajectory boosts the nation’s standing in global markets. It signifies a robust demand that could influence supply chains and inventory management. The impressive figures point to strong international relationships, particularly with Mexico, which are testaments to the expanding markets for American dairy products. As dairy farmers and industry stakeholders, pondering these. developments and their long-term implications is essential. How might these changes shape your business strategies? Could this surge affect domestic prices or inventory levels down the line? These trends are more than just statistics; they are indicators of potential shifts in the market that warrant close attention and strategic response. The challenge lies in adapting to and capitalizing on these dynamic market conditions to foster sustained growth and competitiveness in the global arena.
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.
Unpack August’s dairy boom and export shifts. How is bird flu in California shaping the market? Find critical insights for dairy pros.
Summary:
August’s dairy market showcased opportunities and challenges as U.S. milk equivalent exports rose by 2.6%, driven by significant increases in cheese and butter production at 1.7% and 14.5%, respectively. However, Nonfat Dry Milk (NFDM) production dipped 10.1%, reflecting potential shifts in the market. The surge in Milk Protein Concentrate (MPC) with a remarkable 77.8% rise opens doors for diversified applications, yet complexities arise with abundant cream supplies affecting butter prices. Meanwhile, the troubling bird flu outbreak in California looms over future production, as the need to decipher spot and future pricing becomes essential for farmers to remain competitive amidst this evolving landscape.
Key Takeaways:
August showcased significant growth in dairy product production, notably with cheese and butter seeing double-digit increases.
Global cheese export trends provide U.S. dairy farmers a lucrative opportunity despite recent price declines.
The dairy market experienced divergent prices, with spot prices lowering and futures prices remaining robust.
California’s dairy sector is grappling with a bird flu outbreak, potentially impacting state and national milk production figures.
Abundant cream supply has led to a notable rise in butter production, yet prices continue to fall due to surplus.
NFDM production dropped, while domestic consumption declined steeply, contributing to inventory buildup.
Dairy professionals must remain vigilant and adapt to capitalize on emerging market opportunities and challenges.
In August, the dairy industry saw a surprising jump in production, going against what everyone expected and breaking new ground. Cheese production increased by 1.7%, and butter had a massive jump of 14.5%. This rise, though, comes with its challenges. The bird flu situation in California is getting serious, with almost 100 confirmed cases on dairy farms. It raises a fundamental question: how are these dynamics influencing the dairy market?
August was a testament to the dairy industry’s resilience, showcasing both growth and challenges. Understanding and adapting to the dairy scene has become more critical than ever amid these dynamics. Balancing production peaks with potential threats is a complex situation that could redefine the industry. Let’s explore how these forces reshape the market and the inspiring opportunities they present for everyone involved.
August’s Production Surge: A Double-Edged Sword for Dairy Farmers
August’s dairy production numbers show a surprising jump that has grabbed the interest of many folks in the industry. Essential dairy items like cheese, butter, yogurt, and ice cream saw some solid gains compared to what was expected. Cheese production increased by 1.7%, and butter took off with a 14.5% jump. So, yogurt and ice cream got a nice little boost, with yogurt up 7.7% and ice cream up 5.9%. This spike raises questions about what’s behind it. It could be due to increased demand, improved production techniques, other factors, and what it means for dairy farmers and others involved.
Milk Protein Concentrate (MPC) Takes the Spotlight
One of the top performers, Milk Protein Concentrate, saw a fantastic growth of 77.8%. This boom could open up more chances for producers to get creative and expand their use of MPC in different food products. More and more people are looking for high-protein ingredients, which is excellent news for MPC to thrive.
On the flip side, nonfat dry milk dropped by 10.1%, which could mean some changes in the market are happening. This downturn and the drop in domestic disappearance we’ve seen lately bring some challenges we must tackle. Farmers who depend on NFDM must roll with the punches and might want to check out different production methods or mix things up with what they offer.
What Does This Mean for the Industry?
These production changes present a myriad of opportunities and challenges for dairy farmers. The increased output in popular products like MPC could pave the way for better markets. Simultaneously, other sectors, especially NFDM, might require some innovative changes. The industry’s ability to adapt, manage higher production levels while meeting market demands, and monitor inventory is essential. By doing so, farmers and companies can maintain stability and foster growth in this ever-evolving field.
Riding the Global Cheese Wave: An Unmissable Opportunity for U.S. Dairy Farmers
In August, U.S. milk equivalent exports increased by 2.6%. This rise isn’t just a number; it shows how much the world wants U.S. dairy products. But the real standout was cheese, with exports jumping 15.2% compared to last year. These numbers are a nudge for U.S. dairy farmers to seize new opportunities.
What’s up with the massive demand for U.S. cheese overseas? You can find the answer in the incredible variety and quality of products that American dairy farmers are famous for. As people worldwide get bolder with their food choices, the fantastic range of U.S. cheese hits the mark and goes beyond what they want. Mix that with solid trade deals and lower tariffs; you have an excellent recipe for boosting international sales.
These trends are shaking things up in the U.S. dairy market. Better export numbers show that American farmers are more than aren’t depending on local sales, which can be a bit hit or miss. They have a presence in international markets where people might shop differently. Dairy farmers can mix things up with their income and protect themselves from the ups and downs of the local market.
The robust cheese export numbers should catalyze dairy farmers to diversify and expand their product offerings. It’s crucial to continue riding this global demand wave by exploring new markets and niche segments. Farmers can also enhance their herd management and milk production processes. Establishing robust supply chains that can cater to local and global needs is paramount. This is an exciting time for the dairy industry, with ample opportunities for growth and innovation.
The U.S. dairy market has challenges, but tapping into the current global demand boom could shake things up for the industry. Dairy farmers must develop innovative strategies to stay competitive in this growing export market.
It is diverging Paths: Spot and Futures Prices in the Dairy Market.
Understanding how spot and futures prices relate is critical in any market, especially in the dairy world. Spot prices tell you the prices for cheese and butter, while futures contracts lock in prices for future delivery. The newest information shows that spot prices stay the same or go down while futures prices hold steady or climb up. That’s a pretty cool situation! What’s up with this?
Could this difference mean a shift in how the market vibes are on the way? When futures prices are above spot prices, it often suggests that the market feels optimistic about future price increases. The market crowd thinks there might be less supply or some more robust demand on the horizon. Since spot prices aren’t showing this now, we should consider what’s happening.
So, regarding cheese and butter, are we dealing with a short-term thing or something that could hang around for a bit? For now, the cream supply and solid butter production might hold off any price hikes. For now, the futures market could be watching some changes that aren’t obvious in the current supply situation. These tips can help dairy farmers deal with price fluctuations more smoothly.
Checking out these price changes can help producers and market analysts understand and prepare for what’s ahead in the market. History has shown that these differences can open up opportunities for strategy or highlight risks we should keep an eye on. It’s an excellent opportunity—maybe a brief—to consider adjusting business strategies to take advantage of these shifting market vibes.
California’s Dairy Industry Faces a New Threat: Bird Flu Outbreak Raises Concerns
California’s dairy scene is dealing with a surprise issue: almost 100 confirmed cases of bird flu. This outbreak could shake up the state’s milk production in October, potentially decreasing the broader U.S. dairy market. California has always been a big player in milk production, significantly impacting the national total. But right now, the health crisis will likely change things up, causing U.S. milk production to dip by about 0.5% after a steady year-on-year run.
How the market reacts to this situation shows a pretty exciting gap. Even though there’s a drop in output coming up, it seems like no one is really worried or freaking out about it right now. Traders and industry folks don’t seem too worried because there’s already a surplus of cream and butter that could soften the short-term supply hit. But if the bird flu situation worsens, the long-term effects could be severe. Dairy farmers and industry pros must stay sharp and plan competent to handle the current disruptions and prepare for future impacts. Is this a chance or a challenge to rethink how we do production?
Cheese Market: Navigating a Tempest or Skimming Uncharted Waters?
The U.S. and EU cheese market is experiencing some significant changes this season. In August, U.S. cheese production exceeded expectations, showing a tremendous increase of 1.7% compared to last year. Production went up simultaneously, and exports shot up by 15.2% compared to last year. Cheese consumption at home held firm, with a decent disappearance rate of 1.1%.
But as we roll into September and October, the market is figuring things out in some unknown territory. Cheese prices in the U.S. and EU have been decreasing lately, thanks to changes in production and maybe shifts in what consumers want or competition from abroad. Last week, CME blocks got a bit of support, but overall, the market vibe is feeling bearish. What’s this all about for dairy farmers and those involved? Are we seeing the start of a longer-term price stabilization or just a short-term bump?
With solid August numbers giving us some breathing room, the next step is to get a grip on how things are changing for the rest of the year. It’ll be interesting to see if these trends stick around or change, depending on how people spend their money, chances for exports, and any unexpected shifts in the global market. If you’re in the industry, keeping up with all the changes is critical to making the most of your investments and handling risks like a pro.
Butter Market Conundrum: The Surprising Effects of a Cream Surplus
Is it any surprise that with so much cream around, U.S. butter production jumped by a whopping 14.5% in August compared to last year? This spike has changed the butter market scene. So, why aren’t butter prices going up, too? The answer is all about the basic economic principles of supply and demand, which are at odds.
With all this cream around, butter production is kicking into high gear as processors take advantage of the extra raw materials. But here’s the thing: the market’s already packed with butter. There’s a lot of extra supply out there, pushing prices down since producers have to sell their stuff at lower prices to get people to buy more. This situation is different from how markets usually react when there’s a significant boost in production.
Butter prices have been slow lately and, in some cases, even dropping, which is strange given that production is doing so well. Too many products in the market can water down their value, making the perks of high production levels less noticeable. This situation has many folks in the industry feeling puzzled as they try to figure things out in these tricky times. Having less of something doesn’t just lead to lower prices; it also creates issues with storage and logistics, making things even trickier.
We must also consider what this cream oversupply might mean for the long haul. It might look like a bump in the road, but it could lead to better pricing and help U.S. butter reach more markets worldwide. This trend highlights how important it is to plan and think strategically when dealing with production booms, turning today’s challenges into opportunities for the future. Are producers ready to take on the challenge? We’ll have to wait and see.
Navigating the NFDM Labyrinth: Balancing Production and Demand in a Complex Market
The NFDM market has been on a pretty interesting path, with prices staying steady despite a noticeable production drop of 10.7% compared to last year in August. Usually, when production drops, prices go up, but that’s not happening here, which shows things are a bit complicated in the market. One big thing to note is the drop in domestic disappearance in July and August, with declines of 80.1% and 37.7%, respectively. The drop in demand caused a buildup of inventory, which helped keep the market stable and avoided price increases.
So, what’s the deal with the powder market going forward? The current inventory is building up, so the supply should handle sudden demand jumps pretty well, keeping prices steady. Producers should reconsider their game plan if the domestic disappearance trend continues. Does this mean we see a push for more exports or a rethink of production to match what people want right now? We’ll have to wait and see. Dairy farmers and industry folks need to keep an eye on these changes because even a tiny shift in how the market feels can mean significant changes in their game plan.
The Bottom Line
Looking at what’s happening, we see that the dairy industry is at a turning point with impressive production boosts and big market challenges. The significant increase in cheese and butter production is excellent. Still, it also shows how tricky it can be to handle supply when demand changes—something every savvy dairy farmer gets. California’s bird flu situation and the ups and downs of unpredictable futures markets make things even more complicated in an already shaky situation.
Even with the hurdles, it’s clear that there’s an excellent chance for clever positioning right now. The gap between spot and futures pricing could hint that market players should look past the short-term challenges and consider what’s coming down the road. With the world craving more cheese, U.S. dairy farmers can take advantage of excellent international chances if they play their cards right.
So, it’s not just about getting through the tough stuff but also making the most of what’s happening right now. Is the butter surplus pushing us to develop fresh ideas to boost demand, or will we keep dealing with this extra stock without a plan? Finding the right mix of uncertainty and opportunity makes us rethink our game plans, keeping the dairy industry strong and looking ahead.
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.
How did USMCA boost U.S. dairy exports to Mexico by 59%? What does this mean for dairy farmers? Discover key insights and future opportunities.
Summary:
Have you ever wondered why Mexico has become such a crucial market for U.S. dairy producers? The answer lies in trade policies, particularly the United States-Mexico-Canada Agreement (USMCA). From 2014 to 2023, U.S. dairy exports to Mexico surged by an impressive 59%, thanks to strategic agreements like the USMCA, which replaced NAFTA. These policies develop new markets and increase demand for U.S. dairy products. Mexico’s proximity and favorable trade conditions have significantly contributed to this growth. However, the future outlook faces challenges due to the recent depreciation of the Mexican peso. This could reduce Mexico’s buying power and make U.S. dairy products more costly and less competitive.
Key Takeaways:
USMCA replaced NAFTA, significantly increasing U.S. dairy exports to Mexico.
From 2014 to 2023, U.S. dairy exports to Mexico surged by 59%.
Trade policies like USMCA help develop new markets, increasing demand for U.S. dairy products.
More than one-third of U.S. nonfat dry milk and skim milk powder exports go to Mexico, up to half by 2023.
Mexico is the top international customer for U.S. cheese, with exports rising nearly 80% between 2014 and 2023.
The Mexican peso’s fluctuating value may impact future dairy exports, but the established partnership remains strong.
2024 is on track to be another record year for U.S. dairy exports to Mexico despite potential challenges.
Did you know that between 2014 and 2023, U.S. dairy exports to Mexico increased by 59%? This increase, from little less than a billion pounds in 2014 to over 1.6 billion pounds in 2023, emphasizes the critical significance of the Mexican market for American dairy producers. Trade policies like USMCA and NAFTA help dairy farmers in the United States by creating new product markets and raising demand. The United States-Mexico-Canada Agreement (USMCA) is critical to this success story, fostering a robust economic relationship and ensuring that U.S. dairy products stay competitive in Mexico’s expanding market.
USMCA: A Game-Changer for U.S. Dairy Farmers
The United States-Mexico-Canada Agreement (USMCA) replaced the North American Free Trade Agreement (NAFTA) on July 1, 2020. This contemporary trade agreement seeks to establish a more balanced and reciprocal trading climate among the three countries concerned. NAFTA has been in force since 1994, altering the North American trading environment. Still, it has also been criticized for its impact on manufacturing employment and its outmoded provisions in light of technological improvements and new economic realities.
The USMCA has updated and comprehensive laws governing digital commerce, worker rights, and environmental norms. The accord has significantly impacted the dairy business, benefiting U.S. dairy farmers.
Key provisions include:
Increased Market Access: The USMCA expands U.S. dairy producers’ access to the Canadian market while removing Canada’s Class 7 pricing scheme. This strategy formerly permitted Canadian dairy farmers to undercut American rivals by artificially lowering milk prices.
Tariff Reductions: The accord decreases dairy tariffs, making U.S. commodities more competitive in Mexico and Canada.
Regulatory Alignment: The USMCA aligns sanitary and phytosanitary procedures to guarantee that health and safety requirements do not unfairly impede commerce. This alignment enables U.S. dairy goods to flow more efficiently and with less bureaucratic friction.
Enforcement Mechanisms: The USMCA establishes more robust enforcement tools. These measures guarantee that the agreement’s obligations are followed, safeguarding U.S. dairy farmers from unfair trade practices.
Overall, the USMCA is a significant advance over NAFTA in critical aspects, including updated rules that reflect contemporary economic realities. These improvements for the dairy business in the United States promise new prospects for expansion, better market stability, and the possibility of a more fair playing field in North America.
The USMCA’s Role in Driving U.S. Dairy Exports to Mexico
The remarkable increase in U.S. dairy exports to Mexico may be directly related to the implementation of the USMCA. Between 2014 and 2023, the United States experienced a 59% growth in dairy exports to its southern neighbor, climbing from slightly under 1 billion pounds in 2014 to over 1.6 billion pounds by 2023. This increase highlights the importance of the USMCA as an accelerator for extending market access and strengthening trade connections. The USMCA’s provisions, such as increased market access and tariff reductions, have significantly influenced this growth.
Trade policies like USMCA and NAFTA help dairy farmers in the United States by creating new product markets and raising demand. These agreements are a crucial reason U.S. dairy exports to Mexico have expanded over the last decade, and they help explain why U.S. dairy will do better in these countries in 2024 than in Asian destinations. The USMCA’s provisions, such as increased market access and tariff reductions, have driven this growth. For instance, the increased market access to Canada and the removal of Canada’s Class 7 pricing scheme have opened up new opportunities for U.S. dairy producers. The tariff reductions have made U.S. commodities more competitive in Mexico and Canada, increasing exports.
Between 2014 and 2023, U.S. dairy exports increased by 19%, totaling 942 million pounds. The Mexican market has emerged as an essential growth driver within this environment. Notably, from January to July 2024, dairy exports to Mexico increased by almost 950 million pounds, a 2% rise over the previous year. Mexico has outpaced other main export markets in importing dairy from the United States, making it a crucial partner for U.S. dairy.
According to USDA statistics, Mexico imported 35% of the 2.56 billion pounds of nonfat dry milk and skim milk powder produced in the United States last year. This interchange was enabled by Mexico’s proximity and advantageous trade accords, bolstering its position as a leading consumer of dairy goods from the United States. This bilateral commerce is lucrative and necessary for the long-term health of the United States dairy industry.
The growing trend in cheese exports is also remarkable. From 2014 to 2023, cheese exports to Mexico increased by about 80%, reaching around 327 million pounds last year. This enormous expansion is reflected in the USMCA’s effective reworking of trade dynamics. This year’s exports to Mexico have increased dramatically, with five of the seven months in the top five in volume. Year-to-date through July, U.S. cheese shipments to Mexico were over 40% higher than the previous year.
While currency variations, such as the devaluation of the Mexican peso, may present obstacles, the strategic benefits of proximity and advantageous trade conditions continue to ensure Mexico’s position as a critical participant in the U.S. dairy export market. As a result, the prospects for U.S. dairy exports to Mexico are positive in the future, thanks to USMCA.
U.S. Dairy Titans: NDM, SMP, and Cheese Dominate Exports to Mexico
Let’s drill down into the specifics of which U.S. dairy products are leading the charge in exports to Mexico. The data speaks volumes about the impact of these critical commodities:
The first two options are nonfat dry milk (NDM) and skim powder. According to USDA statistics, a whopping 35% of the 2.56 billion pounds of nonfat dry milk and skim milk powder produced in the United States last year ended up in Mexican markets. This isn’t a fluke; Mexico’s proportion of U.S. nonfat and skim milk powder exports in the last decade has increased from around one-third to almost half by 2023 [USDA]. This significant gain corresponds to a 50% increase in total U.S. powder exports overseas during the same time. In practice, these powders serve many functions in Mexican food production, including strengthening cheese vats, improving other culinary applications, and even being reconstituted into drinking milk.
Next on the list is cheese, another major dairy export from the United States to Mexico. From 2014 to 2023, cheese exports to Mexico increased by about 80%, reaching roughly 327 million pounds last year. Historically, Mexico accounted for just 20% of U.S. cheese exports in 2014. Fast forward to last year, when the proportion has grown to 35% [USDA]. Notably, 2024 is shaping to be another golden year, with U.S. cheese shipments to Mexico roughly 40% higher than last year in the first seven months. Despite anticipated slowdowns caused by increased cheese costs, underlying demand remains strong. If cheese exports plateau, demand for NDM and SMP is expected to cover any gaps, particularly as Mexican processors shift to utilizing these commodities to supplement their cheese manufacturing capacity.
This in-depth analysis of NDM, SMP, and cheese exports emphasizes the importance of these commodities in maintaining and developing the US-Mexico dairy trade. With advantageous trade agreements and geographic advantages, U.S. dairy farmers are well-positioned to satisfy Mexico’s changing demands.
Geographical Proximity: Fueling a Seamless U.S.-Mexico Dairy Trade
The physical closeness of the United States and Mexico has considerably simplified operations, lowering transportation time and costs and making it simpler and less expensive for U.S. dairy farmers to send their goods to Mexican markets. This proximity promotes a symbiotic economic relationship in which fresh items may travel quickly, assuring quality and efficiency.
Economically, the Mexican market is ready for U.S. dairy, owing to a growing middle class with greater buying power and dietary trends toward protein-rich foods like milk. The USMCA has reinforced this partnership by assuring tariff-free trade in critical dairy goods.
However, the Mexican peso’s shifting value is crucial. When the peso falls in value, Mexican customers pay more for American goods, impeding exports. In contrast, a rising peso makes American dairy more inexpensive, increasing trade. The peso recently touched its lowest exchange rate in almost two years, raising concerns for U.S. exporters. However, existing trade agreements and proximity provide a buffer, ensuring a solid and optimistic trading future.
Looking forward, U.S. dairy exports to Mexico show promise, but the road ahead is challenging. Currency exchange rate volatility is a significant concern. The recent depreciation of the Mexican peso versus the U.S. dollar may reduce Mexico’s buying power, making U.S. dairy goods more costly and less competitive. This volatility may undermine the steady growth trajectory that U.S. dairy exporters have enjoyed. In times of a lower peso, Mexican purchasers may seek cheaper alternatives or cut their total dairy consumption, affecting export volumes.
However, demand for nonfat dry milk (NDM) and skim milk powder (SMP) in Mexico remains strong. These products are used in various culinary applications, including strengthening cheese vats and reconstituting into drinking milk. Mexico has been the most extensive US NDM and SMP market during the last decade, and this trend seems to continue. As Mexico’s food processing sector matures and expands, the need for high-quality dairy components is anticipated to stay high.
Furthermore, the USMCA’s geographical closeness and low tariffs provide U.S. dairy exporters a significant edge. The agreement assures that U.S. dairy goods may access the Mexican market with little restrictions, maintaining a dependable and efficient trading relationship. This privileged access sustains present trade volumes and paves the way for future development as Mexican consumer tastes and industry demands shift.
Another positive development is the diversity of dairy products exported to Mexico. While NDM and SMP remain at the forefront, there is a significant possibility for expansion in other categories, such as cheese and whey products. U.S. exporters may adopt specific methods to meet the changing wants and tastes of Mexico’s customer base and food sector.
While currency swings constitute a significant risk, the ongoing demand for NDM and SMP, together with the advantages of the USMCA, suggest a bright future for U.S. dairy exports to Mexico. Stakeholders should stay watchful and adaptable, exploiting the trade agreement’s benefits while managing economic factors to maintain and improve their market position.
The Bottom Line
From the increase in dairy exports spurred by trade agreements such as USMCA to the critical function of geographical proximity, the United States dairy industry’s connection with Mexico has proved beneficial. Its substantial success in the nonfat dry, skim milk powder, and cheese sectors shows the partnership’s relevance. As we look forward, one concern remains: how can U.S. dairy farmers and industry experts capitalize on these prospects in the face of unpredictable economic conditions? Your proactive efforts could affect the future of U.S. dairy exports.
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.
Uncover the intricate relationship between a weaker dollar, U.S. dairy exports, and trade with Mexico. Our expert insights will illuminate the impact on your business, providing you with a deeper understanding and confidence in navigating these complex dynamics.
Summary:
The ebb and flow of the dollar’s value make waves across the global dairy market. For U.S. dairy producers, a weaker dollar means an enhanced competitive edge abroad, potentially boosting export prospects and market share in key regions like Europe and New Zealand. Conversely, American consumers face pricier imports, possibly leading to a reduction in U.S. dairy imports. On the other hand, economic turbulence in Mexico, compounded by concerns over President-elect Claudia Sheinbaum’s policies, raises questions about the sustainability of U.S. dairy exports to our southern neighbor. As the peso weakens, the purchasing power of Mexican consumers declines, presenting U.S. dairy exporters with both challenges and opportunities. The dollar’s value is crucial in global commerce, influencing pricing and competitiveness by making American dairy goods more internationally competitive. A weaker dollar makes dollar-priced goods more affordable to international purchasers, making them more appealing to overseas customers. This potential for increased market share should inspire optimism for U.S. dairy exporters. The dollar’s depreciation provides a rare opportunity for U.S. dairy farmers to increase their worldwide reach and use their currency-driven competitiveness to manage economic uncertainty and sustain substantial export volumes. The ripple effect of a weaker dollar means fewer dairy imports as American customers’ buying power declines, making imported items more costly.
Key Takeaways:
The recent decline in the dollar’s value enhances the competitiveness of U.S. dairy products on the global market.
U.S. dairy imports may decrease due to the weaker dollar, potentially benefiting domestic producers.
Economic policies and currency fluctuations in Mexico create both opportunities and challenges for U.S. dairy exports to the region.
The Federal Reserve’s monetary policy shifts significantly impact the dollar’s value and, by extension, the global competitiveness of U.S. dairy exports.
Farmers and dairy professionals should stay informed about forex trends and economic policy changes to effectively navigate the evolving market landscape.
Have you noticed the recent shifts in the dairy market? You’re not alone. The dollar’s value is a crucial factor in global commerce, influencing pricing and competitiveness. Recent fluctuations in the dollar’s value have had a significant impact on U.S. dairy exports and imports. Since June, a 5% decrease in the dollar index has made U.S. dairy goods more attractive to overseas markets while increasing import costs. Why does this matter to you? Currency fluctuations can have a substantial effect on the profitability of dairy farmers and industry experts in the United States. However, understanding these factors can equip you to navigate the complex world of international commerce.
Currency
Change Against USD (1 Year)
Impact on U.S. Dairy Exports
Impact on U.S. Dairy Imports
Euro (EUR)
-6%
Positive
Negative
New Zealand Dollar (NZD)
-4%
Positive
Negative
Mexican Peso (MXN)
+10%
Negative
Positive
How a Weaker Dollar Supercharges U.S. Dairy Exports
The recent decrease in the dollar index has significant consequences for U.S. dairy exports. Since June, the dollar index has declined 5%, making American dairy goods more internationally competitive. But how can a lower dollar improve competitiveness?
When the dollar falls, purchasing the same quantity of U.S. products takes fewer foreign currency units. Essentially, dollar-priced things become more affordable to international purchasers. For example, dairy goods such as cheese, milk, and butter, vital U.S. exports, are suddenly more appealing to overseas customers.
Consider this: if a European customer were to compare the pricing of dairy goods from the United States to those from the European Union or New Zealand, the prices would be around 4% to 6% more than they would have been if exchange rates remained stable. This equates to savings for international customers when buying American-made dairy, offering a strong economic incentive to buy American goods [Statista].
Furthermore, this pricing advantage may help U.S. dairy exporters gain market share, especially when other major producers, such as the E.U., face output constraints or rising prices. A great example is Europe’s current dairy supply challenges, which make American products more affordable and, in some cases, the only feasible alternative. This potential for increased market share should inspire optimism and hope for U.S. dairy exporters.
This transformation is more than just a theoretical concept; it has practical implications. U.S. dairy exports have already seen a minor boost in demand in major regions. For example, Mexico maintains a significant export market despite current economic worries under President-elect Claudia Sheinbaum, mainly due to the peso’s currency fluctuations and decreasing buying power. As a result, the weaker currency provides some protection against these issues. This information should make you feel informed and prepared for market conditions.
The dollar’s depreciation provides a rare opportunity for U.S. dairy farmers to increase their worldwide reach. The next stage is for these manufacturers to use their currency-driven competitiveness to manage economic uncertainty and sustain substantial export volumes.
The Ripple Effect: Weaker Dollar Means Fewer Dairy Imports
As the dollar falls in value, American customers’ buying power declines, making imported items more costly. This, in turn, might lead to a decrease in U.S. dairy imports. Consider a California shopkeeper who cheaply got a high-quality cheese from France last year. With the weakened currency, the same cheese is now substantially more expensive. With these increased expenses, the shop may lower its stock of foreign cheeses or switch to local, more affordable competitors. This situation mirrors a more significant trend: lower currency dynamics make it less appealing for U.S. firms and consumers to buy foreign dairy goods.
Consider the effect of yogurt imports from Greece, a popular choice among health-conscious customers. Suppose Greek yogurt costs increase owing to an unfavorable exchange rate. In that case, American retailers may reduce orders, resulting in fewer Greek yogurt selections on store shelves. This move impacts customer preferences and helps U.S. dairy farmers, who can fill the gap with locally-made yogurt. This potential for U.S. dairy farmers to fill the gap and meet customer needs should make them feel valued and important.
It’s worth noting that this dynamic doesn’t only apply to expensive or niche items. Even everyday dairy products like butter and milk powder may witness a decline in import volume as prices increase. For example, suppose milk powder from New Zealand becomes more expensive. In that case, U.S. producers may reduce imports and shift to local sources, increasing demand for US-produced milk powder.
A dropping dollar has a domino effect: higher prices for imported commodities lead to lower import quantities, lowering U.S. dairy imports. For American dairy farmers, this might mean opportunity, giving them a competitive advantage in a local market where imports previously dominated.
Seizing the Competitive Edge: How Depreciation of the Dollar is Catapulting U.S. Dairy Exporters Ahead
Comparative Advantage: With the dollar’s devaluation, U.S. dairy goods have earned a significant price advantage over their European and Kiwi competitors. As currency swings cause a 4% to 6% decrease in price for American-made dairy goods, U.S. exporters may now offer more competitive rates worldwide. This pricing advantage might help U.S. dairy to gain a more significant market share, particularly in light of European dairy shortages. Because of the lower buying power caused by currency fluctuations, American goods are preferred by many overseas purchasers, assisting in the maintenance and future expansion of U.S. dairy export volumes.
Several U.S. dairy goods experienced substantial export increases in August 2024, partly due to the dollar’s drop in value. Let’s look at which items are driving this spike.
Cheese: The United States has always been a leader in cheese manufacturing, but the recent drop in the currency has boosted exports. U.S. cheese exports increased by 12% in August compared to last year’s, with Japan, South Korea, and Mexico being significant consumers. According to the United States Dairy Export Council, the increase in cheese exports is directly due to the price competitiveness obtained by the lower dollar [USDEC].
Milk Powder: Milk powder exports have also increased significantly. Exports rose 15% in August 2024, driven by strong Southeast Asian and African demand. These areas are increasingly turning to the United States for dependable dairy supply, and advantageous exchange rates have further exacerbated this tendency. Exporters’ case studies show substantial contract wins with customers in the Philippines and Kenya, which they attribute to the lower dollar.
Whey Protein: Among the dairy exports from the United States, whey protein has stood out. Notably, whey protein exports to China and the E.U. have increased by 18% and 20%, respectively. According to testimonials from industry experts such as Global Dairy Trade, the currency advantage has made U.S. whey protein more inexpensive and appealing to global purchasers.
These data and case studies show a clear trend: the dollar’s declining value is more than a macroeconomic event; it’s a fundamental element generating spectacular profits for U.S. dairy exporters. American dairy farmers may continue to grow their worldwide presence by capitalizing on their monetary advantage.
The Fed’s Rate Hikes: How They Supercharged the Dollar
In 2022, the Federal Reserve adopted a callous approach to combating increasing inflation. By raising interest rates, the U.S. central bank significantly boosted the currency. How did this occur? Higher interest rates naturally attract international investors seeking higher returns on their investments, bringing more money into the U.S. economy and, as a result, increasing the dollar’s value.
This period of dollar strength lasted long into the first half of 2024, putting the U.S. dollar on a pedestal next to several other major currencies. According to the U.S. Dollar Index, the greenback reached some of its highs during this period, demonstrating how vital the Fed’s actions were. This hawkish approach reduced imports while raising exports, resulting in a double-edged sword for the American economy.
However, the economic environment began to alter as inflationary pressures subsided, and the economy showed signs of balance. Sensing these trends, the Federal Reserve started to suggest interest rate reduction. Starting in early 2024, this dovish tilt resulted in a significant decrease in the dollar’s value. The dollar index has fallen by almost 5% since its high, reflecting a more significant international trend of relaxing monetary policies as central banks across the globe began cutting interest rates.
Where does this leave us now? With a weakened dollar, the competitive dynamics of global commerce have shifted. Because of the comparatively lower costs for American commodities overseas, this drop creates fresh chances for U.S. dairy exporters to gain market share. In contrast, U.S. customers may perceive higher-priced imports, making local items more desirable. Monetary policies are crucial in defining trade landscapes, prompting industry experts to consider their impact.
Shifting Sands in the Global Dairy Market: Opportunities and Challenges Amid Currency Fluctuations
The competitive environment shows a dynamic movement in market share among the major dairy exporters, including the United States, New Zealand, and the European Union. Historically, New Zealand and the European Union have been the leading dairy exporters, noted for producing high-quality products at reasonable costs. However, the recent decline in the dollar’s value has significantly changed these dynamics.
With its robust dairy business, New Zealand has long benefited from its favorable climate and effective production techniques. Similarly, the European Union benefits from a diversified dairy product portfolio and a solid reputation for quality. Nonetheless, the weakening of the United States dollar has shifted the playing field. American dairy products, now more inexpensive worldwide, have grown in popularity among global customers, providing a cost-effective alternative to their European and Kiwi counterparts.
Specifically, crucial areas such as Southeast Asia and the Middle East, formerly dominated by New Zealand and E.U. exports, are now seeing a considerable surge in U.S. dairy goods. According to current trade statistics, U.S. dairy export volumes to these areas increased by almost 8% in the last quarter alone [source: Dairy Export Council]. This transition emphasizes the competitive advantage of current foreign currency rates. It demonstrates the durability and flexibility of U.S. dairy exporters in capitalizing on favorable economic circumstances.
In the face of these shifting dynamics, the European Union and New Zealand may need to rethink their tactics for maintaining market dominance. For example, competitively priced American dairy imports put extra pressure on the E.U.’s dairy sector, which is already dealing with production issues and regulatory limits. Similarly, New Zealand must deal with currency swings while exploring new markets or improving production efficiency to remain competitive.
The dollar’s depreciation has changed the competitive environment, enabling U.S. dairy exports to gain substantial momentum against previously dominating players such as New Zealand and the E.U. As market circumstances change, stakeholders must be aware and adaptive to profit from these adjustments. What methods would you use to handle the unstable global dairy market?
Mexico’s Economic Turbulence: Navigating the Challenges and Opportunities for U.S. Dairy Exports
When we look at the Mexican economy, various variables come into play, notably the Bank of Mexico’s recent choices and the policies that President-elect Claudia Sheinbaum is expected to pursue. To begin, the Bank of Mexico reduced interest rates significantly twice this year, first in March and again in August. Lower interest rates often boost economic activity by making borrowing more affordable. Still, in Mexico, they have had the unforeseen result of pushing down the peso.
So, why would it happen? Lower interest rates make a currency less appealing to overseas investors seeking more significant returns. As investments decline, so does the demand for the currency, resulting in its devaluation. Combine that with market anxieties about the incoming administration’s economic plans, which have raised investor fears about stability and fiscal discipline, and you’ve got a formula for a lower peso.
The impending administration of President-elect Claudia Sheinbaum complicates matters even further. While she has promised to address inequality and increase public expenditure, there is genuine concern about how her initiatives will be financed. Investors are skeptical, and their pessimism puts more downward pressure on the peso. Consequently, the currency has depreciated dramatically, losing almost 10% of its value versus the dollar since last year [source: Bloomberg].
This economic picture is critical for the United States’ dairy export business. As the peso weakens, Mexican customers increasingly pay more for imports, particularly dairy goods from the United States. So, although the United States may be enjoying a worldwide advantage owing to a lower currency, Mexico may soon provide a more tough market.
Pesos and Pitfalls: Navigating the Challenge of U.S. Dairy Exports to Mexico
The peso’s depreciation presents significant hurdles for U.S. dairy exports to Mexico. The 10% decrease in buying power implies that Mexican consumers can pay less, limiting their capacity to purchase imported items priced in dollars. This leads to more competition and decreased demand in a vital market for U.S. dairy farmers.
Challenges: American dairy exporters may encounter growing price sensitivity among Mexican clients. Previously inexpensive items may suddenly be deemed luxury items. Mexican importers may also look for cheaper options, such as local suppliers or lower-cost manufacturers in other nations.
However, this circumstance has potential. Exporters from the United States might increase their focus on quality and branding, stressing American dairy products’ better standards and safety. While the price may be a deterrent, many buyers will find that the perceived superior quality makes it worthwhile. Furthermore, tailoring marketing methods to appeal to budget-conscious customers might offer new opportunities.
Strategically, developing ties with local distributors who understand market dynamics may provide U.S. dairy exporters an advantage. Collaborative efforts guarantee that American goods remain on shelves despite economic challenges. Although the peso’s depreciation presents obstacles, it also allows for rethinking policies, ensuring that U.S. dairy retains its stronghold in Mexico.
The Bottom Line
The currency market changes the U.S. dairy exports and imports scenario. A weakened currency propels U.S. goods to the forefront of global marketplaces, making imports less enticing owing to increased prices. U.S. dairy exporters see chances and challenges as our central banks adjust interest rates and overseas players like Mexico suffer economic turbulence. The peso’s declining buying power due to political upheavals under President-elect Claudia Sheinbaum complicates matters further. How will your company respond to these shifting economic conditions?
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.
Learn why the U.S. dairy industry demands swift government action against Colombia’s unjust milk powder tariffs. How will this impact American dairy farmers?
Summary:
The U.S. Dairy Export Council (USDEC) and National Milk Producers Federation (NMPF) are raising concerns as Colombia plans to impose a 4.86% tariff on U.S. milk powder exports, citing unsubstantiated claims of undue subsidies. These organizations argue that such tariffs threaten to disrupt a longstanding dairy trade relationship, impacting both economies by affecting dairy farmers, exporters, and broader supply chains. Krysta Harden, president and CEO of USDEC, emphasized the need for prompt and decisive U.S. government action, condemning Colombia’s politically motivated, protectionist measures, which jeopardize U.S. economic interests and harm Colombian companies that rely on affordable, high-quality U.S. dairy products.
Key Takeaways:
The U.S. Dairy Export Council (USDEC) and National Milk Producers Federation (NMPF) urge U.S. government intervention.
Colombia’s government plans to implement a 4.86% tariff on U.S. milk powder exports.
Both USDEC and NMPF assert that U.S. milk powder exports are not subsidized.
Colombia acknowledged multiple factors affecting its dairy sector, disputing the need for tariffs.
Preliminary tariffs could destabilize the U.S.-Colombian dairy trade relationship built over decades.
Industry leaders criticize Colombia’s approach, citing it as politically motivated and protectionist.
Past instances indicate Colombia’s pattern of imposing similar trade barriers on other U.S. exports.
Investigation processes will include evidence collection and public hearings.
Tariffs, if finalized, could last up to five years, with reviews pending.
Imagine opening the morning news and discovering that a critical trade partner has implemented tariffs that jeopardize your livelihood. This is the reality that dairy producers in the United States face today, as the United States Dairy Export Council (USDEC) and National Milk Producers Federation (NMPF) express their deep dissatisfaction with Colombia’s preliminary verdict targeting U.S. milk powder exports. “Unfortunately, the Colombian government has chosen to use these politically motivated allegations to impose protectionist trade barriers, which will ultimately affect not only U.S. exporters but Colombian companies and workers who rely on U.S. dairy products and ingredients,” said Krysta Harden, CEO of USDEC. The preliminary finding imposes an extra 4.86% duty on U.S. milk powder exports to Colombia, potentially affecting production choices, investment plans, and job security for dairy farmers and industry experts. This could lead to reduced production, stalled investment, and job losses in the U.S. dairy sector.
The United States dairy sector has long connected positively with Colombia, delivering high-quality milk powder and other dairy products to the country’s developing dairy market. However, this relationship is under tremendous pressure due to a recent preliminary verdict by the Colombian Government. This verdict, which puts a 4.86% tax on U.S. milk powder exports, is based on charges that the U.S. government unfairly subsidizes these exports.
The core of the problem is Colombia’s argument that subsidies offered to U.S. dairy farmers drive down market prices for milk powder, putting Colombian producers at a competitive disadvantage. The United States Dairy Export Council (USDEC) and the National Milk Producers Federation (NMPF) have strenuously denied these assertions, stressing that no evidence supports them.
Despite the absence of supporting data, Colombia has moved on with its decision, thus acting as a protectionist policy. This decision jeopardizes U.S. dairy exporters’ economic interests while potentially affecting Colombian sectors and customers who depend on low-cost, high-quality U.S. dairy goods. The USDEC and the NMPF see this levy as part of Colombia’s more significant, misguided attempt to protect its sectors via unfair trade tactics.
Unpacking the Economic Ties: How U.S. Dairy Exports Fuel Both Nations
The U.S. dairy sector participates in both home and international markets. In 2020 alone, U.S. dairy exports totaled $6.6 billion, with over $92 million in milk powder exported to Colombia, making it one of the top destinations for this commodity [Source: USDA]. This demonstrates the critical economic tie between the United States and Colombia in the dairy industry.
U.S. dairy goods significantly contribute to the Colombian market, accounting for roughly 20% of total milk powder imports [source: ITC Trade Map]. Such figures highlight the interconnectedness of the two countries’ dairy sectors and the possible disruptions created by the proposed tariffs.
Economically, the dairy business in the United States is a powerhouse, delivering more than $628 billion to the economy each year and sustaining approximately 3 million employees [source: IDFA]. This emphasizes the importance and broader economic repercussions of Colombia’s decision to levy further taxes on U.S. milk powder.
Given these data, the proposed 4.86% tax may significantly impact U.S. dairy exporters and Colombian enterprises that depend on U.S. dairy goods. The importance of government involvement cannot be emphasized enough.
Industry Leaders Speak Out: Unfair Tariffs Threaten U.S.-Colombian Trade Relations
Stakeholders in the U.S. dairy industry are very concerned about the implications of Colombia’s decision. Krysta Harden, President and CEO of USDEC, stated, “It’s unfortunate that the Colombian government has chosen to use these politically motivated allegations to impose protectionist trade barriers, which will ultimately harm not only U.S. exporters but also Colombian companies and workers who rely on U.S. dairy products and ingredients.”
President and CEO of NMPF, Gregg Doud, echoed this, saying, “Today’s preliminary findings show once again that the current Colombian government does not respect its trade commitments.” Instead of cooperating with the United States government and the dairy sector to settle this problem mutually beneficially, Colombia has opted to proceed with this meritless probe. The U.S. government must utilize every available instrument to combat the unjustified levies on U.S. milk powder”.
These leaders emphasize the tariffs’ unfair character and more significant economic and political implications. Their comments highlight the potential damage to U.S. and Colombian interests, notably Colombian businesses and workers who rely on a stable and open trading relationship with U.S. dairy exports.
An Imminent Economic Ripple Effect: How Colombia’s 4.86% Tariff on U.S. Milk Powder Transcends Immediate Trade Tensions
The placement of an extra 4.86% tax on U.S. milk powder shipments to Colombia goes beyond current trade issues; it represents a more significant economic disruption that might affect both American and Colombian markets. These duties impose an extra financial burden on U.S. dairy producers and exporters, potentially reducing profit margins. Given that the United States shipped over $2.3 billion in dairy goods to Latin America in 2021 alone, with Colombia being a key partner, these tariffs may dramatically lower the amount of U.S. dairy exports, jeopardizing domestic income streams (USDEC).
On the Colombian side, local businesses and workers that depend on U.S. dairy goods fear higher pricing and possible shortages. The United States provides high-quality dairy ingredients for Colombia’s food manufacturing industries. Increased tariffs may raise manufacturing costs for Colombian enterprises, making their products less domestically and globally competitive. Consequently, Colombian consumers may see increased pricing, and local businesses may suffer significant operational issues. This could lead to reduced competitiveness, increased consumer prices, and operational challenges for Colombian businesses.
Furthermore, economic interdependence between the United States and Colombia extends beyond dairy. Previous disputes, such as Colombia’s strict restrictions against U.S. ethanol and chicken, point to a trend of trade barriers that might jeopardize the two countries’ long-standing economic partnership. If left unresolved, these moves may force a reevaluation of trade policy, perhaps leading to retaliatory tariffs from the United States, growing into a more significant trade battle affecting many sectors. This could lead to a broader trade conflict, potentially affecting multiple sectors and significantly deteriorating the U.S.-Colombia trade relationship.
The stakes are significant for both nations. According to the USDA Economic Research Service, trade obstacles often result in retaliatory measures, which reduce international commerce by up to 20% over five years. These tariffs add to the industry’s already complicated and risky situation, which includes shifting global dairy prices, international trade conflicts, and supply chain disruptions.
Although the proposed tariffs’ immediate impact may seem restricted to the dairy industry, the long-term economic consequences might be far-reaching. The U.S. and Colombian economies stand to lose significantly, emphasizing the critical need for diplomatic settlement and cooperative trade policies.
Swift and Strategic Response: Leveraging Diplomacy and Retaliation to Protect U.S. Dairy Interests
The problem requires fast and decisive action from U.S. trade authorities. But what can the U.S. government do to oppose Colombia’s unreasonable tariffs? Leveraging diplomatic networks is critical. The United States may take this problem to international trade authorities like the World Trade Organization (WTO) to seek a settlement based on existing trade agreements. They may also contemplate retaliatory taxes or sanctions on Colombian imports as a strategic reaction.
The need for such actions cannot be emphasized. This is about more than just trade policy; it is also about American dairy farmers’ livelihoods and the integrity of global trade processes. The United States safeguards its economic interests and fair trade ideals by ensuring that trade regulations are obeyed and enforced.
As a dairy industry expert, think about the more significant ramifications. How may these activities impact your firm, either directly or indirectly? Now is the moment to push for fair trade practices and policies that provide a level playing field for everybody. We must keep foreign governments responsible and uphold the rules underlying global trade.
Not an Isolated Case: Colombia’s Pattern of Protectionist Measures Against U.S. Exports
Imposing a 4.86% levy on U.S. milk powder is uncommon. Colombia has already implemented similar protectionist restrictions against other U.S. commodities. For example, in recent years, Colombia imposed taxes on U.S. ethanol shipments despite a lack of factual evidence to support such steps. Furthermore, Colombia has imposed unjustified import prohibitions on U.S. chicken and beef, citing safety and regulatory concerns without sufficient evidence. These frequent measures indicate a tendency to utilize trade barriers to protect local companies from foreign competition rather than address fundamental difficulties inside their sectors. This repeating practice contradicts the spirit of fair trade agreements and points to a more significant trend of protectionism affecting numerous U.S. agriculture and export sectors. [Source: USDEC; NMPF]
The Path Forward: Evidence, Hearings, and Potential Long-Term Tariffs
The Colombian authorities will acquire further evidence as the probe moves on. This phase tries to back up the accusations made against U.S. dairy exports. Near the conclusion of this evidence period, a public hearing will be held in which stakeholders may submit their views for or against adopting these tariffs.
The provisional 4.86% tax on U.S. milk powder will last four months. If the study finds the tariffs justified, this preliminary step might become a definitive decision. Such a ruling might apply tariffs for up to five years before requiring a reconsideration.
Frequently Asked Questions
What are the main reasons behind Colombia’s new tariffs on U.S. milk powder?
Colombia’s Government says that U.S. milk powder exports are heavily subsidized, resulting in unfair competition for Colombian dairy farmers. The U.S. Dairy Export Council (USDEC) and the National Milk Producers Federation (NMPF) say these allegations are unfounded and politically driven.
How will the tariffs affect U.S. dairy exporters?
The increased duty of 4.86% will raise prices for U.S. dairy exporters, making their goods less competitive in the Colombian market. This might result in lower market share and financial losses for American dairy producers and exporters.
What impact will the tariffs have on the Colombian dairy industry?
While the tariffs benefit Colombian dairy farmers, industry analysts believe they may affect Colombian businesses and workers dependent on low-cost U.S. dairy goods and additives. The protectionist action may disrupt supply chains and raise expenses for local enterprises.
What actions are U.S. dairy organizations and officials taking in response?
USDEC and NMPF urge U.S. trade authorities to contest Colombia’s decision and protect American dairy interests. They underline the need for a prompt and intelligent reaction to communicate that such protectionist measures will not be allowed.
Is there any precedent for Colombia imposing similar trade barriers on U.S. products?
Colombia has already filed litigation against U.S. ethanol exports and prohibited imports of U.S. chicken and meat. This pattern reflects a more significant trend of protectionist actions against U.S. exports.
What are the next steps in the tariff investigation?
The Colombian Government will gather further information and convene a public hearing to weigh arguments in the case. The provisional tariff will be in effect for four months during the study. Tariffs may be maintained for up to five years after a final ruling.
The Bottom Line
The U.S. dairy sector faces a big challenge as Colombia’s planned 4.86% tax on U.S. milk powder jeopardizes economic and commercial ties between the two countries. Leading industry voices from USDEC and NMPF have voiced deep dissatisfaction with Colombia’s unfounded subsidy accusations and protectionist practices, which risk decades of cooperation.
The need for immediate government action cannot be emphasized. As Colombia progresses with its meritless probe, the effect on American dairy producers and exporters may be significant, perhaps reverberating across other sectors owing to a history of discriminatory policies. U.S. trade authorities must use all available resources to combat these discriminatory levies while adhering to existing trade agreements.
Finally, fair trade is a foundational premise for long-term economic cooperation. Ignoring such protectionist activities might have long-term ramifications, jeopardizing the integrity of international trade agreements and damaging companies that rely on these critical economic transactions. Will the U.S. government rise to the occasion and protect the interests of the dairy sector, or will inactivity pave the way for further unjustified trade barriers?
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.
Is Mexico truly a better dairy trade partner for the U.S. than Canada? Dive into market access, trade policies, and economic perks. What’s your take?
Summary:
The debate often centers around Canada and Mexico when considering the best trading partner for U.S. dairy from a conservative perspective. Both countries play significant roles in the dairy trade under the United States-Mexico-Canada Agreement (USMCA). However, Mexico seems to be pulling ahead due to its open market policies and zero tariffs, facilitating smoother trade relations. In contrast, Canada’s complex tariff rate quotas (TRQs) and protective measures have led to trade disputes. With U.S. dairy exports valued at $9.6 billion in 2023, identifying trading opportunities is crucial. Canada’s tariffs and protective measures pose significant challenges for U.S. exporters despite the substantial trade value reaching almost $800 million. Meanwhile, the U.S.-Mexico partnership has strengthened, with U.S. dairy exports to Mexico increasing by 59% from 2014 to 2023 to$1.4 billion. Major exports to Mexico include nonfat dry milk (NDM) and skim milk powder (SMP), making Mexico responsible for almost one-third of all NFDM/SMP exports from the U.S. Cheese shipments have also climbed by about 80% over the same period, highlighting the favorable trade environment and geographical proximity that benefit this relationship.
Key Takeaways:
Mexico is the largest market for U.S. dairy exports, benefiting from zero tariffs and a collaborative trade relationship under the USMCA.
Canada, a significant market, imposes protective measures and complex TRQ systems that hinder U.S. dairy exports.
Despite USMCA reforms, Canada poses challenges through its dairy pricing system and TRQ measures.
Mexico’s open market policies and joint efforts with the U.S. help promote dairy consumption and productivity, creating a favorable export environment.
Canada’s supply management system supports local farmers but limits U.S. market access, which results in higher prices for Canadian consumers.
Ongoing trade disputes with Canada highlight U.S. dairy exporters’ difficulties, contrasted with the smoother relationship with Mexico.
Future outlook suggests persistent challenges in the U.S.-Canada dairy trade while the U.S.-Mexico relationship thrives.
Overall, Mexico offers a more reliable and advantageous partnership for U.S. dairy exports than Canada.
Did you know that the U.S. dairy industry’s export value in 2023 alone was a staggering $9.6 billion? With such a substantial contribution to the economy, it’s crucial to identify the most promising trading opportunities. Which country is a more favorable partner for the United States dairy industry: Canada, with its stringent TRQs and protective measures, or Mexico, with its open market and zero tariffs? This essay will delve into the complexities of dairy trade under the United States-Mexico-Canada Agreement (USMCA) and determine which countries emerge as the top trading partners for U.S. exports.
Canada and Mexico stand out differently when considering market access and trade volume for U.S. dairy exports. Both markets hold substantial prospects, but each faces hurdles under the United States-Mexico-Canada Agreement (USMCA).
Canada
Canada is an important market for U.S. dairy goods, with fluid milk and cheese prospects. However, optimism fades owing to Canada’s restrictive trade regulations. Tariff Rate Quotas (TRQs) management presents considerable hurdles for U.S. exporters. Although the USMCA sought to alleviate these constraints, ongoing trade battles impede complete market access.
Canada’s dairy industry uses a supply management system to maintain local output and pricing, which limits imported dairy products. Despite the USMCA’s elimination of the contentious Class 7 pricing mechanism, Canada continues to deploy sophisticated TRQs to protect its market. This strategy has resulted in many disagreements between the two nations.
The United States objections to Canada’s TRQ allocations have had inconsistent results, highlighting the persistent complexity of managing these trade obstacles. These protective restrictions prevent U.S. dairy exporters from fully capitalizing on new market opportunities. Frustration with Canada’s failure to fully implement trade agreements causes recurrent tensions and disagreements, jeopardizing the stability and predictability required for long-term trading ties.
The U.S. dairy business interacted significantly with the Canadian market in 2023, but the statistics indicate underlying trade difficulties. Cheese, butter, and milk powders were among the products exported to Canada, reaching almost $800 million. While this accounts for a significant share of U.S. dairy exports, it also highlights the constraints imposed by Canada’s protective measures and TRQ laws. Despite these obstacles, the trade volume between the two countries demonstrates the possibility of more substantial exchanges if trade barriers are well controlled.
Mexico
When we switch our focus to Mexico, the terrain seems more welcoming. Mexico is the biggest market for U.S. dairy exports, with no tariffs on dairy goods. The USMCA strengthened this partnership, assuring easy and steady market access. Mexico’s historical dependence on dairy products imported from the United States significantly reinforces this link. There are fewer obstacles here, with no tariff barriers and a cooperative partnership aimed at mutual progress.
The collaborative spirit of the USMCA has preserved Mexico as the leading consumer of U.S. dairy, aided by a zero-tariff regime on dairy imports. Unlike Canada, Mexico has maintained its commitment to free trade, strengthened by reciprocal endeavors to increase dairy consumption and production. This cooperative posture makes it easier for U.S. dairy products to enter Mexican markets. It encourages combined efforts to grow and enhance the dairy industry in both nations.
From 2014 to 2023, U.S. dairy exports to Mexico saw a significant 59% increase, from just under 1 billion pounds to over 1.6 billion pounds. Over the same period, overall U.S. dairy exports increased by 19%, or 942 million pounds, with Mexico driving much of this growth. With other markets expected to purchase less U.S. dairy in 2024, Mexico’s imports have already surpassed 2023 levels. By July 2024, exports had exceeded 950 million pounds, up 2% from the first seven months of 2023. This trend indicates a promising future for U.S. dairy exports to Mexico.
Favorable trade agreements and geographical closeness have aided this connection. The most significant exports to Mexico are nonfat dry milk (NDM) and skim milk powder (SMP). A decade ago, Mexico accounted for almost one-third of all NFDM/SMP exports from the United States; this figure is expected to rise to nearly 50% by 2023. 35% of the 2.56 billion pounds produced in 2023 were sent to Mexico for use in culinary applications, cheese fortification, and reconstituted milk.
Cheese is the second biggest category. From 2014 to 2023, cheese shipments to Mexico climbed by about 80%, reaching approximately 327 million pounds. Market share increased from 20% to 35%. Exports may achieve a new record in 2024, even if cheese shipments are delayed owing to rising costs. NFDM/SMP sales will increase as Mexican processors switch to U.S. powder.
The USMCA and NAFTA have played pivotal roles in the growth of U.S. dairy exports to Mexico, opening up new markets and boosting demand and pricing. These agreements have driven the rapid expansion of U.S. dairy exports to Mexico over the past decade. However, a weak Mexican peso may pose a challenge as U.S. products become more expensive. Despite this, the future of U.S. dairy exports to Mexico looks promising, thanks to robust trade agreements and geographical advantages.
Mexico is a better partner for U.S. dairy exports. Its open market, minimal tariffs, and collaborative attitude outperformed Canada’s convoluted TRQ policies and protectionist position. While Canada has market potential, its problems cannot be overlooked. Mexico has a consistent and transparent market, making it a more appealing partner. Canada’s aggressive approach creates impediments, but Mexico’s cooperative policies offer a more streamlined environment. This disparity significantly impacts U.S. dairy market penetration, making Mexico the superior overall partner. The importance of the U.S.-Mexico dairy trade relationship cannot be overstated, and it is a testament to the value and significance of the audience in this context.
Deciding whether Canada or Mexico makes for a better partner with the U.S. is no small feat when trading dairy products. Let’s break it down with complex numbers to see who stands out in this fierce trading battle.
Country
Total U.S. Dairy Exports (in USD)
Tariffs on Dairy Products
Market Access under USMCA
Recent Trade Disputes
Canada
$731 million
Variable, with TRQs
Complex, with ongoing disputes
Yes
Mexico
$1.4 billion
Zero
Smooth and cooperative
No
Battle of Borders: Recent Developments in U.S.-Canada Dairy Trade
Recent developments in the US-Canada dairy trade relationship have been defined by ongoing trade disputes and judicial fights over Canada’s TRQ allocation mechanisms. Despite the USMCA’s goal of reforming the dairy industry, Canada’s use of protective regulations has resulted in various conflicts. Recent verdicts have often supported Canada’s TRQ administration, much to the chagrin of U.S. dairy exporters, who allege that these policies limit market access. These continued conflicts indicate that the obstacles experienced by U.S. dairy exporters in Canada will undoubtedly endure, impeding the smooth increase of market share and causing uncertainty.
Unless significant legislative reforms are implemented, the future of the US-Canada dairy trading relationship will be dogged by ongoing conflicts and trade restrictions. The United States may continue to seek resolution via dispute settlements. Still, the chances of significant progress are slim, given Canada’s unwavering defensive attitude. On the other hand, the dairy trade relationship between the United States and Mexico is expected to strengthen and stabilize further. The continuous joint efforts and commitment to zero tariffs indicate a bright future in which both nations will benefit from a strong trade relationship.
The Bottom Line
In conclusion, our extensive research shows that Mexico is a better trade partner for the U.S. dairy business than Canada. Mexico’s dedication to open market policies, zero tariffs, and a proactive approach to collaborative efforts have laid the groundwork for a stable and mutually advantageous economic environment. In contrast, Canada’s protective TRQ policies and complicated trade dynamics provide considerable obstacles to U.S. dairy producers. With these considerations in mind, one must wonder: In a world where market stability and growth are critical, might the strategy taken with Mexico create a precedent for altering U.S. dairy trade tactics on a larger scale?
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.
Discover the USDA’s promising forecast for U.S. dairy exports in 2025. How will this impact your dairy farm? Keep reading to find out.
Summary: The USDA’s latest report projects steady growth in U.S. dairy exports for fiscal years 2024 and 2025, with expectations of $8 billion and $8.1 billion, respectively. While overall dairy imports and exports show minor fluctuations, there’s a notable increase in cheese and nonfat dry milk demand globally. Challenges such as currency strength and rising freight rates remain, but opportunities in underexplored markets like Southeast Asia and the Middle East hold promise. This growth, driven by increasing cheese prices and ongoing demand for nonfat dry milk and lactose imports, offers a practical opportunity for dairy farmers to expand their market reach. Dairy farmers should focus on improving product quality, cost management, market diversification, building relationships, and staying informed about current financial trends and projections to navigate these economic changes.
USDA projects steady growth in U.S. dairy exports for fiscal years 2024 and 2025, with expectations of $8 billion and $8.1 billion, respectively.
Global demand for cheese and nonfat dry milk is increasing.
Challenges include currency strength and rising freight rates.
Underexplored markets like Southeast Asia and the Middle East offer promising opportunities.
To capitalize on growth, farmers should focus on product quality, cost management, market diversification, relationship-building, and staying informed about current economic trends.
Are you prepared to capitalize on the impending prospects in dairy exports? According to the USDA’s most recent prediction, U.S. dairy exports would reach an astonishing $8.1 billion in fiscal year 2025. This increase is more than just a figure; it reflects the growing worldwide demand for high-quality American dairy products such as cheese, nonfat dry milk, and lactose. Increased worldwide demand is driving increased cheese exports, nonfat dry milk remains a popular option in various global markets, and new markets are opening up for US dairy goods. As a dairy farmer, these estimates are more than just abstract facts; they offer a practical opportunity to increase your market reach. How prepared are you to capitalize on these future opportunities?
Forecasted Gains: An Optimistic Outlook for U.S. Dairy Exports in 2024
The present situation of U.S. dairy exports in fiscal year 2024 indicates a stable and favorable prognosis. According to the USDA’s most recent quarterly data, dairy exports total $5.9 billion. The USDA anticipates these figures to total $8 billion by the conclusion of the fiscal year. This prognosis stays consistent with past projections, indicating confidence in the market’s durability.
Several reasons contribute to this increasing trend, including rising worldwide cheese prices, which have piqued the curiosity of overseas purchasers. Furthermore, there is ongoing demand for nonfat dry milk and lactose imports. Together, these components offer a positive picture for the future of US dairy exports, implying that fiscal year 2024 might be a year of significant success and development for the sector.
Promising Projections: USDA Anticipates $8.1 Billion in U.S. Dairy Exports for Fiscal Year 2025
As we look forward to fiscal year 2025, the USDA predicts a positive growth in U.S. dairy exports to $8.1 billion. Several essential reasons contribute to this significant rise. Rising worldwide cheese prices have routinely produced increased income for US dairy exporters. Furthermore, a strong and consistent demand for nonfat dry milk and lactose imports still supports the expected increase in dairy export values. These factors contribute to the favorable prognosis for the US dairy sector, indicating significant market potential and ongoing demand from worldwide buyers.
A Golden Opportunity: Capitalizing on Rising Export Demands
These bullish export estimates not only provide a bright future for dairy producers but also a promising increase in profitability. Higher worldwide cheese costs and an increased taste for nonfat dry milk and lactose indicate a significant rise in demand for farm-direct goods. This rise in exports may result in more stable and higher milk prices, offering a financial buffer during economic uncertainty.
Furthermore, as overseas customers turn their attention to American dairy, the opportunity to broaden their market reach expands. This is an excellent chance to form new alliances and strengthen current ones, making your company more robust and prospering in a competitive global market. Increased export demand may result in greater use of your production capacity, a lower excess, and more predictable cash flow—all critical components of a sustainable and strategic agricultural enterprise.
Overcoming Obstacles: Navigating Currency Fluctuations and Ocean Freight Rates
The strong projection for US dairy exports may seem optimistic, but it is essential to examine the obstacles that might stand in our way. Farmers must handle two critical difficulties to capitalize on these opportunities appropriately: the rising value of the US dollar and variable maritime freight prices.
Fluctuating Ocean Freight Rates: Rising ocean freight charges pressure dairy export profitability. Higher transportation expenses might reduce profits, making it critical to investigate cost-effective shipping solutions. One practical recommendation is to sign long-term contracts with dependable transportation partners to lock in more consistent costs. Diversifying your export markets may also help reduce the risks associated with regional shipping cost variances. For instance, consider using bulk shipping or consolidating shipments to reduce per-unit costs. As for currency hedging, financial instruments like forward contracts or options can lock in current exchange rates, protecting your income from future currency swings.
Appreciating U.S. Dollar: A rising currency makes American dairy goods more costly for foreign consumers, possibly depressing demand. While you don’t have complete control over this, currency hedging is one brilliant technique to consider. In simple terms, currency hedging is a strategy that allows you to lock in current exchange rates using financial instruments. This protects your income from future currency swings, ensuring you can still make a profit even if the value of the U.S. dollar increases.
Furthermore, building ties with overseas customers might be crucial. By offering exceptional customer service and upholding high-quality standards, you can create loyalty that can survive price hikes caused by currency fluctuations. Don’t underestimate the value of engaging in trade missions or using government initiatives to boost agricultural exports.
While these problems complicate the environment, being proactive and intelligent may help you manage difficult times. Staying educated and adaptable may help dairy farms prosper in the global market.
Together We Thrive: Strengthening Our Dairy Community Amidst Export Growth
Isn’t it fantastic to see our industry’s exports continue to rise despite several challenges? However, we must remember that success is driven by our community’s strength and resilience, not simply the numbers. As dairy farmers, we are part of a distinct and close-knit community united by shared values and a common aim to supply high-quality dairy products globally. Sharing best practices, assisting, and cooperating when feasible may significantly impact the process. Have you explored networking with other farmers or joining a local cooperative to improve your operations? Consider the advantages of sharing insights into efficient manufacturing procedures, such as implementing automated milking systems or using sustainable farming practices, and market-trading tactics, like participating in trade shows or leveraging social media for product promotion. Together, we can strengthen and flourish the dairy farming community, ensuring every farmer has an equal opportunity to succeed in the face of increased demand and changing market circumstances. Let us support one another, understanding that we all benefit when one of us succeeds.
The Double-Edged Sword of a Stronger U.S. Dollar: Navigating Challenges and Opportunities
The strengthening of the US dollar is a two-edged sword for dairy producers. On the one hand, a higher dollar can purchase more on the global market, lowering the cost of imported inputs like equipment, feed additives, and fertilizers. However, this implies that US dairy goods will become more costly for overseas purchasers. This may make our exports less competitive since overseas purchasers may seek cheaper alternatives from other nations. So, how does this affect you, the typical dairy farmer?
First, recognize that demand for U.S. dairy goods may fall modestly as foreign consumers seek more economical alternatives. However, do not panic. The worldwide market for American dairy, exceptionally high-quality cheese, and new lactose products remains high. This reassurance should make you feel secure and prepared for potential changes in the market.
Here are some practical steps to navigate these economic changes:
Enhance Product Quality: Focus on producing high-quality milk and dairy products. Higher-quality commodities often fetch higher prices, especially in competitive marketplaces.
Cost Management: Tighten your operations to control expenditures better. Look for methods to reduce energy, labor, and feed costs while maintaining herd health and milk quality.
Market Diversification: Research local markets or specialty product lines that may influence global pricing fluctuations. Organic milk, specialist cheeses, and dairy-based health products may provide more consistent results.
Build Relationships: Build stronger ties with buyers and cooperatives. Long-term contracts and strong client bases might provide more stability during turbulent times.
Stay Informed: Monitor current economic trends and projections. Being aware of prospective adjustments allows you to make proactive choices rather than reactive ones.
By being adaptive and carefully managing your farm’s operations, you can weather economic swings while prospering in the dynamic world of dairy farming.
The Dollar Dilemma: How Strengthening U.S. Currency Impacts Dairy Exports
The rise of the US currency has far-reaching consequences for dairy exports. When the currency appreciates, American items become more costly for international consumers, reducing demand. This situation presents a problem to dairy producers that depend on overseas markets to sell milk, cheese, and other goods. So, what does this imply for you, the dairy farmer? Fewer foreign purchasers might imply cheaper pricing for your items, thus reducing your profit margins.
However, knowing the economic environment might help you negotiate these shifts more successfully. Here are some practical steps you can take:
Diversify Your Markets: Relying on only one or a few markets might be dangerous. Expand your consumer base to encompass both local and foreign customers. In this manner, a decline in one area will not be as detrimental to your total firm.
Focus on Value-Added Products: Instead of selling raw milk, try making value-added goods such as cheese, yogurt, or lactose-free milk. These goods often have a better profit margin and may be less prone to price changes.
Reduce Costs: Look for methods to make your processes more efficient. Whether via automated milking systems, improved feed management, or energy-saving technology, cutting costs may help you weather economic downturns.
Stay Informed: Monitor financial news and reports that discuss currency fluctuations, trade policy, and global economic situations. Being aware of prospective changes allows you to make better-informed judgments.
Navigating the complexity of a strong US dollar may be difficult. Still, with intelligent preparation and adaptation, you may reduce some risks and continue succeeding in today’s harsh economic climate. Remember, resilience and flexibility are essential for converting obstacles into opportunities.
The Bottom Line
In summary, the USDA’s most recent projection portrays a positive picture for U.S. dairy exports, predicting strong growth through 2025, with total dairy exports anticipated to reach $8.1 billion. While there are challenges, such as shifting currency values and rising freight charges, the potential to capitalize on increased worldwide demand for cheese, nonfat dry milk, and lactose remains substantial. As a dairy farmer, this positive outlook should encourage you to consider how your farm may fit with these developing export markets.
How can you position your farm to maximize these attractive export opportunities? Stay current on market developments, improve manufacturing methods, and seek advice on handling export logistics. Being proactive and competent may help your farm prosper despite increasing export demands and contribute to the dairy community’s strength. Let us use this chance to safeguard our industry’s long-term success.
Don’t miss the 2024 & 2025 market predictions that could change everything for dairy farmers. What do changes in milk production and prices mean for your farm’s future?
Summary: The latest USADA August 2024 World Agricultural Supply and Demand Estimates (WASDE) report presents a mixed bag of news for dairy farmers. Milk production forecasts for both 2024 and 2025 have been lowered, driven by decreased cow inventories and reduced output per cow. However, price forecasts for cheese, non-fat dry milk (NDM), and whey have been raised thanks to strong market prices. Intriguingly, while 2024 sees a reduction in fat and skim-solids-based imports, 2025 is expected to rise in these areas. Export forecasts present a bright spot, with increased shipments of butter and milkfat projected for 2024. The all-milk price is raised to $22.30 per cwt for 2024 and $22.75 per cwt for 2025, reflecting a robust market response to diminished production and sustained demand. Dairy farmers are thus navigating a market defined by reduced production yet rising prices, signaling an urgent need to adapt and strategize. Are you prepared to take on these evolving challenges and opportunities?
Milk production forecasts for 2024 and 2025 have been lowered due to decreased cow inventories and reduced output per cow.
Price forecasts for cheese, non-fat dry milk (NDM), and whey have been raised, driven by solid market prices.
For 2025, fat and skim-solids-based imports are expected to rise after a reduction in 2024.
Export shipments of butter and milkfat are projected to increase in 2024.
All milk price forecast is $22.30 per cwt for 2024 and $22.75 for 2025, highlighting a strong market response.
Dairy farmers face a market with reduced production but rising prices, necessitating strategic adaptation.
Recent changes to the USDA’s August 2024 World Agricultural Supply and Demand Estimates (WASDE) report have sparked quite a buzz in the industry. If you feel overwhelmed by the statistics and ramifications, you have come to the correct spot. Let me break it down for you. The USDA has decreased milk production predictions for 2024 and 2025, potentially impacting cow inventory and market pricing. Here’s what we’ll talk about: the reasons for lower milk production forecasts and what they mean for your farm, changes in import and export forecasts for both fat and skim-solids bases, price forecasts for critical dairy products like cheese, butter, and nonfat dry milk (NDM), and how these changes affect Class III and Class IV price forecasts, as well as the overall milk price. This article will guide you through these modifications and explain how they may affect your operations. Understanding the patterns of declining milk supply, increased import needs, and shifting pricing is vital for strategic planning and profitability. By understanding these changes, you can take control of your operations and make informed decisions. Intrigued? Let’s explore what these data represent and how to capitalize on the changing market.
Year
Milk Production Forecast (Billion pounds)
All Milk Price ($/cwt)
Cheese Price ($/lb)
NDM Price ($/lb)
Whey Price ($/lb)
Butter Export Forecast (Million pounds)
2024
Decrease from previous forecast
$22.30
Increase
Increase
Increase
Increase
2025
Decrease from previous forecast
$22.75
Increase
Increase
Increase
Unchanged
USADA Report Unveils New Realities for Dairy Farmers: Are You Ready?
As we go into the current dairy market environment, let’s look at the recently released USADA report that has everyone talking. This study is more than simply a collection of facts; it offers a glimpse of the industry’s current and future trends. Notably, it shows a minor but considerable decline in milk production projections for 2024 and 2025. These expectations are lower than prior estimates, indicating a decrease in cow stocks and production per cow. Such changes are critical because they may impact pricing, supply chains, and your bottom line. The variations in cow inventory highlight the more significant dynamics impacting the dairy industry, highlighting the significance of being educated and adaptive in these volatile times.
Import and Export Forecasts: What Do They Mean for You?
The import and export predictions for dairy products depict a complex picture. Imports of fat and skim solids are predicted to drop in 2024. In contrast, for 2025, we anticipate an increase in imports across both measures. What does this imply for you as a dairy farmer? Reduced imports often depend on home manufacturing to fulfill market demand. This move may allow you to provide more locally made items.
Exports are expected to increase in 2024 due to increasing butter and milk fat shipments. These goods attract more worldwide purchasers, reflecting the strong competitive position of U.S. dairy. While the fat-based export projection stays unchanged, the skim-solids-based export is expected to increase by 2025, owing to the competitive price of U.S. nonfat dry milk (NDM) worldwide.
Why is competitive pricing of NDM important? Lower costs make US NDM more appealing worldwide, perhaps increasing export quantities. This might improve income streams for farmers focusing on NDM production and balance out domestic market swings.
Brace Yourselves, Dairy Farmers, for Some Shifting Tides in the Market
The price projections for 2024 are diverse, but let us break them down. Good news: cheese, Nonfat Dry Milk (NDM), and whey prices will increase this year. These goods are in short supply since milk output is expected to decline. Furthermore, their local and international demand remains strong, driving up costs. Cheese and whey prices are rising due to current market developments, which is good news for those specializing in these goods.
However, butter does not share this optimism. The expectation for butter prices has been revised somewhat downward. Several things might be at play here, including improved manufacturing processes and shifting demand. This shift may result in a narrower margin for individuals who predominantly produce butter. Now, let us discuss Class III and Class IV rates. Prices for Class III and Class IV are expected to climb in 2024. What’s the reason? Higher cheese and whey costs for Class III and higher NDM prices balance Class IV’s lower butter pricing.
And here’s an important point: what does this imply for you? Rising pricing may increase profitability, particularly if your manufacturing is aligned with these more profitable items. Conversely, it may be time to reconsider your approach if expenses rise and you’re stuck in low-yield areas. These price variations indicate a market reacting to subtle adjustments in supply and demand. It’s a complicated world, but recognizing these patterns will help you navigate and make educated choices to keep your dairy business running smoothly. For instance, you might consider diversifying your product range to include more profitable items or investing in efficiency measures to reduce costs in low-yield areas.
2025 Outlook: Are You Ready for an Optimistic Surge in Dairy Prices?
The 2025 outlook estimates portray a hopeful picture of dairy commodity pricing. Cheese, butter, nonfat dry milk (NDM), and whey will likely increase prices. This price increase is primarily attributable to lower milk output and rising local and worldwide demand. For dairy producers, this dramatically influences earnings and strategic planning. The potential for increased pricing in 2025 offers hope for increased profitability and should motivate you to manage your production effectively.
Reduced cow stocks and lower output-per-cow estimates are critical to reducing milk supply. This supply shortage and steady demand pave the way for increased pricing. For example, price projections for cheese, butter, NDM, and whey are expected to rise. Farmers must alter their financial expectations and operational plans appropriately, as the all-milk price will likely rise to $22.75 per cwt. This calls for strategic planning and proactive management to prepare you for the changes ahead.
Increased pricing might result in higher revenue and profit margins for companies that manage their production effectively. However, careful planning is required for feed, equipment, and labor expenditures, which may also increase. Monitoring market circumstances and being agile will be critical to managing these changes effectively. It’s essential to be aware of potential risks, such as increased costs or changes in demand, and have contingency plans to mitigate them.
The Intriguing Game of Imports and Exports: What the USADA’s Latest Report Means for Your Dairy Farm
The new USADA report reveals some noteworthy trends in the dairy business, notably in imports and exports. Imports of fat and skim-solids base are lowered in 2024, but there is a twist in 2025. Imports are expected to increase on both a fat and skim-solids basis. This increase in imports may increase competitiveness in the domestic market, putting pressure on dairy producers in the United States to innovate while remaining cost-efficient.
Exports tell another story. The fat-based export prediction for 2024 is boosted by increased predicted butter and milk fat exports. While the skim-solids base export prediction for 2024 remains constant, it has been improved for 2025 due to more competitive pricing for U.S. nonfat dry milk (NDM) in the worldwide marketplace. These favorable export estimates indicate a more robust demand for U.S. dairy goods overseas, which is good news for local producers who may profit from the global market’s desire. However, this increased demand may also lead to higher domestic prices, which could affect your cost of production and profitability.
How do these changes affect the global dairy market, and what do they mean for U.S. dairy farmers? The predicted export increase indicates that American dairy products remain competitive and famous globally. In contrast, the expected rise in imports for 2025 predicts a competitive domestic market environment, prompting U.S. farmers to implement new methods and diversify their product offers to remain ahead. Understanding these dynamics and planning to handle them might help convert possible obstacles into opportunities.
The Shifting Dynamics: How Will Reduced Cow Inventories Impact Your Dairy Farm?
The latest USADA data offers a bleak picture, with lower cow stocks and production per cow. This shrinkage directly influences the milk supply, triggering a chain reaction in the dairy business. Have you considered how fewer cows may affect your operations?
With a limited milk supply, dairy product costs are sure to rise. Consider this: the value of anything grows as its supply decreases. This fundamental economic theory implies that dairy producers may get more excellent prices for their milk, but it also indicates a tighter supply. Consumers may have difficulty accessing dairy goods as rapidly as previously, resulting in shortages on grocery store shelves.
In essence, the primary message is to be adaptive. Understanding and predicting these movements allows for more informed actions, such as maximizing herd production or exploring new markets. Remember that the environment changes, but you can successfully traverse these hurdles with the correct techniques.
Navigating Market Shifts: Be Proactive and Adaptable
Dairy farmers must be agile and forward-thinking when faced with these shifting market dynamics. Here are some actionable insights to consider:
Adjust Production Levels: Given the reduced forecasts for milk production in 2024 and 2025, it may be wise to reassess your herd’s productivity. Can you enhance efficiency in feeding, milking, or herd management practices to maintain or boost output per cow?
Explore New Markets: With imports and exports shifting, especially the expected higher shipments of butter and milkfat in 2024, now could be the perfect time to identify new market opportunities. Consider diversifying your product line or exploring international markets where U.S. nonfat dry milk (NDM) is becoming more competitive.
Stay Informed: The market is bound to fluctuate. It’s crucial to stay updated with the latest reports and forecasts. Regularly consult resources like the USADA World Agricultural Supply and Demand Estimates and industry updates to make informed decisions.
Financial Planning: With the all-milk price projected to rise to $22.30 per cwt in 2024 and $22.75 per cwt in 2025, now is a pivotal time for financial planning. Budgeting effectively and perhaps investing in technologies or practices that boost production can pay off in the long run.
Networking: Engage with other dairy farmers, industry experts, and advisors. Sharing insights and strategies can help you navigate these changes more effectively. Join local cooperatives and agricultural organizations to stay in the loop and gain support.
Being proactive and adaptable will be your best ally in navigating these market changes. Look at your current practices and consider how to tweak them to align with these new forecasts better. As the saying goes, “By failing to prepare, you are preparing to fail.” Stay ahead of the curve by staying informed and ready to adapt.
From Numbers to Strategy: How WASDE Shapes Your Dairy Farming Future
The USDA World Agricultural Supply and Demand Estimates (WASDE) report offers more than simply a collection of statistics and estimates. It is essential for shaping dairy producers’ choices and tactics nationwide. WASDE provides a complete view of the agriculture market, integrating professional research with current data to provide the most accurate projections possible.
Consider this: the WASDE report impacts everything from milk pricing to feed costs, directly affecting your bottom line. When the study predicts reduced milk production, it informs the market that supply will be tighter. This often increases milk prices as demand stays constant while supply declines. In contrast, expectations of growing imports may suggest greater competition, prompting you to reconsider your export tactics.
In a nutshell, the WASDE report provides a road map for your company strategy. Understanding its projections will help you negotiate the complexity of the dairy business and make educated choices consistent with current trends and prospects. So, the next time the WASDE report is produced, don’t simply scan it; go deep and let its findings lead you.
The Bottom Line
The USADA’s new estimates provide both possibilities and problems for dairy producers. With milk production likely to fall, the sector may see changes in cow stocks and output per cow. Import and export dynamics also shift, influencing anything from butter to nonfat dry milk. Price estimates for dairy products such as cheese, NDM, and whey are increasing, resulting in higher total milk costs in 2024 and 2025.
Staying updated about industry developments is critical for making intelligent judgments. As the landscape changes, being proactive and adaptive will be crucial to success in this dynamic climate.
Are you prepared for the upcoming changes in the dairy market?
Learn why Southeast Asia is buying less dairy from the U.S. despite economic growth. Is it due to a stronger dollar and no trade deals? Find out more.
Despite robust economic development, U.S. dairy exports to Southeast Asia have unexpectedly decreased. In the first five months of 2024, exports to the Philippines, Indonesia, Vietnam, Malaysia, Thailand, and Singapore declined 5%, reaching 440.7 million pounds, compared to the same time in 2023. This is the lowest export volume to the area since 2019, with significant reductions in nonfat dry milk and lactose exports. This decrease is surprising considering the region’s outstanding economic development, such as Vietnam’s 6.4% GDP spike in the first half of 2024 and the Philippines’ 5.7% GDP gain in Q1. Thailand, Malaysia, Indonesia, and Singapore all saw substantial increases.
Country
NDM Exports (2023) in pounds
NDM Exports (2024) in pounds
Lactose Exports (2023) in pounds
Lactose Exports (2024) in pounds
Philippines
50,000,000
46,000,000
16,000,000
13,500,000
Indonesia
40,000,000
37,000,000
18,000,000
15,200,000
Vietnam
30,000,000
27,500,000
14,000,000
11,500,000
Malaysia
25,000,000
23,000,000
12,000,000
10,000,000
Thailand
20,000,000
18,000,000
10,800,000
9,000,000
Singapore
10,000,000
9,700,000
9,500,000
8,600,000
The Staggering Decline of U.S. Nonfat Dry Milk Exports to Southeast Asia
The decrease in nonfat dry milk (NDM) and skim milk powder shipments to Southeast Asia is notable. USDA figures reveal an 8% decrease to 211.2 million pounds in the first five months of 2024 compared to the same time in 2023. This drop is part of a long-term pattern, with US NDM exports being flat since 2020. According to Betty Berning, an analyst with the Daily Dairy Report, the fall is partly due to losing market share. “New Zealand has ramped up its annual shipments to Southeast Asia in 2022 and 2023,” Berning says. Despite heightened competition, overall sales from the top 15 worldwide exporters have dropped since 2020, indicating more significant market issues for U.S. exporters.
Concurrently, U.S. Lactose Exports to Southeast Asia Face a Significant Downturn
Concurrently, U.S. lactose shipments to Southeast Asia have dropped significantly. From January to May 2024, shipments plummeted by more than 16%, reaching barely 72.8 million pounds. This reduction compares sharply with the same time in 2023, illustrating more significant issues in the United States dairy export markets. Year-over-year sales figures for 2023 reflect a similar pattern, highlighting the persistent challenges for American lactose exporters in these expanding regions.
The Economic Boom Amidst Dwindling Dairy Imports: A Southeast Asian Paradox
The surprising drop in U.S. dairy exports contrasts strongly with Southeast Asia’s economic development. Vietnam’s GDP increased by 6.4% in the first half of 2024, Thailand’s by 1.5% in the first quarter, and the Philippines’ by 5.7% over the same period. Despite this growth, the demand for dairy has yet to follow up. A greater GDP indicates more consumer spending, which frequently boosts milk imports. However, this has not occurred in Southeast Asia, providing a challenge for U.S. exporters looking to restore market dominance.
The Currency Conundrum: How a Stronger U.S. Dollar Impacts Dairy Trade with Southeast Asia
A rising U.S. dollar influences global commerce by affecting importing countries’ buying power. When the dollar rises, products priced in dollars become more costly for customers with weaker currencies. This dynamic is essential for the dairy industry. A rising dollar diminishes buying power in expanding Southeast Asian countries, raising the cost of U.S. dairy goods. Importers must pay more local currency for the same items, making U.S. dairy exports such as nonfat dry milk and lactose less desirable than cheaper alternatives.
New Zealand, a significant player in the global dairy industry, benefits from free-trade agreements with numerous Southeast Asian nations, which reduce tariffs and prices. In contrast, the United States needs such accords, leaving its goods at a price disadvantage compounded by the strong currency. This competitive advantage makes New Zealand dairy products more enticing to budget-conscious importers. Unless U.S. exporters can provide cheaper pricing or achieve new trade agreements, recovering market share in Southeast Asia would be tough.
A Price Too High: How U.S. Dairy’s Premium Costs Are Hindering Exports to Southeast Asia
Pricing strategy is another significant barrier to U.S. dairy exports to Southeast Asia. Since January 2023, U.S. dairy goods have often been priced more than overseas rivals. This pricing disparity has hindered Southeast Asian importers, who value cost-effectiveness, from purchasing American items. Even when U.S. prices were reduced, the reductions were insufficient to change purchase patterns. The absence of convincing pricing benefits makes it difficult for U.S. exporters to regain market dominance.
The Bottom Line
The decline in U.S. dairy exports to Southeast Asia is undoubtedly due to several interrelated reasons. The most urgent are:
The loss of market share to New Zealand
The negative impact of a higher U.S. currency on buying power
The uncompetitive pricing of U.S. dairy goods
Despite substantial economic expansion in Southeast Asia, these factors have significantly dropped demand for American dairy exports. The lack of free-trade agreements exacerbates the problem, making U.S. goods less appealing than those from rivals like New Zealand. As a result, unless the United States can change its pricing approach to provide much reduced prices, the route to regaining its prior export quantities remains difficult.
Key Takeaways:
For the first five months of 2024, U.S. dairy exports to Southeast Asia decreased by 5%, marking the lowest level since 2019.
U.S. nonfat dry milk (NDM) and skim milk powder exports fell 8% compared to the first five months of 2023.
U.S. lactose exports to Southeast Asia dropped by over 16% in the January to May period of 2024.
Economic growth in the region has not resulted in increased U.S. dairy imports, contradicting typical market expectations.
The stronger U.S. dollar has eroded purchasing power in Southeast Asian countries, making U.S. dairy products less competitive.
The lack of free-trade agreements and high U.S. dairy prices relative to global competitors have also contributed to the decline in exports.
Summary:
U.S. dairy exports to Southeast Asia have fallen significantly in the first five months of 2024, reaching 440.7 million pounds, the lowest volume since 2019. This decline is despite the region’s economic growth, such as Vietnam’s 6.4% GDP spike and the Philippines’ 5.7% GDP gain in Q1. The decline in nonfat dry milk (NDM) and skim milk powder shipments is notable, with USDA figures showing an 8% decrease to 211.2 million pounds in the first five months of 2024 compared to 2023. The fall is partly due to losing market share, as New Zealand has increased its annual shipments to Southeast Asia in 2022 and 2023. A stronger U.S. dollar impacts dairy trade with Southeast Asia by affecting importing countries’ buying power and raising the cost of U.S. dairy goods.
Find out how increased Mexican demand is boosting U.S. dairy exports amid economic and political changes. How will rising prices affect future trade?
The landscape of U.S. dairy exports is shifting, mainly driven by growing Demand from Mexico. As the dairy sector adapts to economic and political changes, Mexican importers are crucial in shaping current trends. With April shipments to Mexico up 13%, reaching 55,478 metric tons of milk solids equivalent (MSE), the Demand for U.S. dairy is thriving.
Mexico’s Demand is boosting export volumes and revitalizing various dairy categories, from cheese to butter and low-protein whey. Though recent political events have added complexity, favorable economic conditions, and competitive pricing drive this surge. This article explores these factors, focusing on crucial product performances and future market dynamics.
Rebound in U.S. Dairy Shipments: April Sees 13% Spike Following March Decline, Driven by Mexican Demand.
The recent export data reveals a strong recovery in U.S. dairy shipments, showing a 13% increase in April to 55,478 metric tons of milk solids equivalent (MSE). This marks a significant rebound from March’s 24% decline, mainly due to reduced milk powder exports. The April surge highlights the resilience of the U.S. dairy export market and the robust Demand from Mexico. This Demand has been crucial in driving recovery and growth, setting the industry up for continued success despite economic and political fluctuations.
Record Cheese Exports and Broad Dairy Growth to Mexico
USDEC reported that the surge in dairy exports to Mexico was widespread across various product categories. Cheese exports were robust, setting a new record with volumes reaching 17,249 metric tons, a 53% increase. Notable rises were also seen in “other cheese” categories, such as cheddar and gouda, which soared by 73%, while shredded cheeses increased by 43%.
Other dairy products also showed robust growth; butter exports more than doubled to 169 metric tons, and low-protein whey shipments, including dry whey and permeate, surged by 79%. Although nonfat dry milk volumes were down for the eighth month, the 2% decline was the smallest since the downtrend began late last year.
Unprecedented Surge in Butter and Whey Exports Amidst Shifting Trends in Nonfat Dry Milk
Other dairy products also showed robust growth; butter exports more than doubled to 169 metric tons, and low-protein whey shipments, including dry whey and permeate, surged by 79%. Although nonfat dry milk volumes were down for the eighth month, the 2% decline was the smallest since the downtrend began late last year.
Possible Stabilization Signals for Nonfat Dry Milk (NFDM) Amid Slight Decline
The ongoing decline in nonfat dry milk (NFDM) volumes saw a slight reprieve, with only a 2% decrease in April, the smallest drop since late last year. This could indicate a stabilization phase for NFDM, which is crucial for various industrial applications. The modest reduction reflects market dynamics, where Demand for cost-effective dairy solutions persists despite rising cheese prices. This trend may signal steadier times ahead for NFDM in the Mexican market.
A Confluence of Economic Strength and Recovery Driving Mexican Dairy Demand
Mexico’s post-pandemic solid recovery has significantly boosted consumer purchasing power, sustaining high levels of dairy consumption. The competitive pricing of U.S. dairy products, driven by efficient production techniques and favorable exchange rates, further fuels this Demand. A relatively strong peso enhances the attractiveness of American exports, solidifying this growing trade relationship.
Political Dynamics Post-Election: Peso Depreciation Injects Volatility into U.S.-Mexico Dairy Trade
Political influences have dramatically impacted U.S. dairy exports to Mexico. The recent election caused the peso to depreciate by 4% against the dollar. This currency fluctuation challenges Mexican importers, who face higher costs, and U.S. exporters, who navigate an uncertain market environment.
Despite this dip, the peso remains stronger than pre-pandemic levels, thanks to Mexico’s resilient local economy. However, economic growth is slowing, and the initial post-COVID recovery is losing momentum. These factors could affect dairy exports, making it essential for exporters to monitor political developments closely.
As U.S. dairy prices rise, driven by higher production costs and global market trends, the balance of political and economic forces will shape future Demand. Mexican buyers might prefer cheaper options like nonfat dry milk instead of premium cheese. This highlights the need for exporters to adapt to the evolving landscape to maintain trade flows amid uncertainties.
Anticipating Shifts: Rising U.S. Dairy Prices May Catalyze Strategic Adjustments in Mexican Import Patterns
Rising U.S. dairy prices may prompt Mexican buyers to recalibrate their import strategies. As cheese prices climb, they might shift towards more economical dairy alternatives, like nonfat dry milk, to maintain local cheese production. The post-election resilience of the peso could help buffer price sensitivity, preserving strong trade relations. As Mexico’s economy recovers, Demand for high-value dairy products, including organic cheese and butter, is expected to remain robust, though with strategic adjustments for price variations. This dynamic landscape underscores a flexible dairy trade adapting to economic shifts.
The Bottom Line
The recent data showcases a notable recovery in U.S. dairy exports, primarily fueled by Mexican Demand across various products. Significant increases in cheese exports and strong growth in butter and whey shipments underscore the broad appeal of U.S. dairy in Mexico. While nonfat dry milk exports have declined, they are starting to stabilize. This Demand is supported by a strong economy and competitive U.S. prices, though recent political events, like election-related peso volatility, present new obstacles. As U.S. dairy prices rise, strategic adjustments may be needed to sustain this crucial export market. Ultimately, Mexican Demand continues to be critical, underpinning U.S. dairy exports amid economic and political shifts.
Key Takeaways:
April shipments to Mexico soared to 55,478 metric tons of milk solids equivalent (MSE), marking a 13% year-over-year increase.
Record cheese exports reached 17,249 metric tons, a 53% rise, driven by a notable 73% increase in “other cheese” categories like cheddar and gouda.
Butter exports more than doubled to 169 metric tons, while low-protein whey shipments surged by 79%.
Nonfat dry milk (NFDM) volumes saw a slight decline of 2%, the smallest dip in an eight-month downtrend.
A strong local economy and competitive pricing have supported robust Mexican demand, although recent political events, including election-related volatility, present potential challenges.
Future demand trends may shift due to rising U.S. dairy prices, possibly affecting the balance between cheese and NFDM imports.
Summary: The U.S. dairy export landscape is undergoing significant changes due to growing demand from Mexico, which is boosting export volumes and revitalizing dairy categories like cheese, butter, and low-protein whey. The recent export data shows a 13% increase in U.S. dairy shipments to Mexico, with cheese exports setting a new record. Other dairy products also showed robust growth, with butter exports more than doubling to 169 metric tons and low-protein whey shipments surged by 79%. Despite a slight decline in nonfat dry milk (NFDM) volumes, the ongoing decline may signal steadyer times ahead for NFDM in the Mexican market. Mexico’s post-pandemic solid recovery has significantly boosted consumer purchasing power, sustaining high levels of dairy consumption. The competitive pricing of U.S. dairy products, driven by efficient production techniques and favorable exchange rates, further fuels this demand.
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