NASHVILLE, Tenn. (RFD-TV) — While domestic milk production is expected to rise this year and next, so is consumer demand. The U.S. Department of Agriculture (USDA) reports that dairy exports are holding steady.
However, soaring demand for butter, cheese, and yogurt has pushed butterfat levels in U.S. milk higher at twice the pace of protein growth, casting a shadow on the sector’s otherwise positive growth. New research from CoBank reveals that the butterfat boom is creating a new challenge for cheesemakers.
Dairy Supply Surges to Meet Soaring Export Demand
While dairy faces modest price dips, Dr. Mark Jekanowski, Chairman of the USDA’s World Agricultural Outlook Board (WAOB), said demand at home and abroad should keep the market solid for the next two years.
“We continue to see very strong export competitiveness for U.S. dairy products—a lot of strength in both butter and cheese, so fat-basis exports, as well as nonfat dry milk and whey—so supporting those skim solid basis exports,” Dr. Jekanowski said.
A slight increase in imports of skim solids is also forecasted, but many are left wondering what that means for prices.
“This month, we did see a little bit of softening across the board in terms of dairy product prices -- pulled back our cheese, butter, and non-fat dry milk prices this month, but relatively modest reductions,” explained Jekanowski. “The butter price, for example, for 2025, we reduced 16 cents per pound, but it is still well above $2 per pound at $2.36 per pound. For 2026, we anticipate that price strength will continue. Our butter price forecast is $2.25 per pound. Granted, that would be down about 11 cents per pound year-over-year. Similarly, small price reductions this month for cheese, down three cents per pound in 2025 and four cents in 2026. But again, still relatively strong prices, but good export competitiveness in those export markets.”
CoBank: Producers Face Butterfat Imbalance in U.S. Milk Supply
A new report from CoBank warns that the imbalance is complicating production for cheddar and other American-style cheeses, where a stable protein-to-fat ratio is essential for quality and yield.
Milk fat levels are rising faster than protein, disrupting the balance required for high-quality cheese. While the butterfat surge signals strong growth opportunities, cheesemakers must carefully manage protein-to-fat ratios to keep U.S. cheese competitive.
From 2000 to 2017, the protein-to-fat ratio in U.S. milk remained steady, ranging between 0.82 and 0.84. Today, it has slipped to 0.77, leaving cheesemakers with excess butterfat and insufficient protein.
As a result, U.S. producers now face additional costs to adjust their milk supplies, unlike their counterparts in the European Union and New Zealand. By contrast, milk supplies in the European Union and New Zealand have maintained steadier ratios, helping keep their cheese output more consistent.
Industry experts suggest that U.S. processors may need to standardize milk by adding protein concentrates or skimming off butterfat. In the longer term, price signals and breeding strategies could encourage a more balanced milk supply. Without adjustments, American cheese production could face rising costs and quality concerns against global competitors.
World Dairy Stakeholders Meet in the Midwest
The dairy sector will be front and center this week at the World Dairy Expo. And while expanding markets is key, The Expo’s CEO Chad Vincent noted that maintaining the existing market share is just as important.
“I mean, as much consternation as we hear in the media about Canada, the orders are still being filled,” Vincent said. “Canada is still buying cheese. They’re still buying whey. There are still products flowing across to Mexico. It’s so important that you maintain what you have in downtimes and then continue to plant seeds everywhere else.”
He said some programs are already paying off, but finding new customers takes time.
“It usually takes a year or two before you get substantial orders when you start working with international groups,” Vincent explained. “Although with some of the programs we have, we’re actually getting people who place orders at the end of the week. You know, they’ve been with us for a week, and then they’re walking away with product that’s going to be on their shelf as soon as it gets there.”
According to Vincent, the World Dairy Expo will highlight both established markets and new opportunities for the American dairy industry. The Expo kicks off tomorrow in Madison, Wisconsin, and runs through Friday.
