Nate Donnay

U.S. headline milk production growth was much stronger than expected in September, up 4% compared to the forecast of +3.2%. The only other time that we’ve seen an expansion like this was the mid-1980s, reveals Nate Donnay.

In the case of U.S. dairy exports, no “rebelling” is needed, particularly since price is powerful. For all the concern about trade wars, slowing global economic growth, shipping issues and de-globalization, U.S. dairy exports have been strong for products where U.S. prices have been relatively cheap over the past year.

The U.S. has been in the process of building a record amount of new cheese processing capacity which has now been coming online during 2025. 

I anxiously awaited the Liberation Day announcement thinking we would finally “know” what was going to happen, but I quickly realized that the announcement made that day was just the first move in a long and intense chess game, or it was just the lighting of a fuse and we have no idea how long that fuse is or what it is attached to. 

We are setting up for an interesting and potentially volatile dairy market in 2025. 

The outlook for U.S. dairy products in 2025 varies by product. The two with the most-clear trajectories are cheese and skim powders (nonfat dry milk (NFDM)/skim milk powder (SMP)).

If we’re just looking at volume, the export outlook for the second half of 2024 and early 2025 is generally steady, but that isn’t necessarily a bad thing. 

We have seen some very dramatic fluctuations in dairy farm input costs in the past four years, and while some costs have come down, not all of them have and most remain elevated compared to pre-pandemic levels.

Global dairy demand in 2023 was weaker than expected, but there were some pockets where demand was better than forecast.

While it is typically obvious when a team wins, loses or ties (although ties are a rarity in sports these days), in the commodity export world, a win depends on how you define it.