2025 was a banner year for U.S. dairy exports
While tariff and trade tribulations garnered headlines throughout the year, U.S. dairy largely shrugged off the situation and posted export numbers which nearly surpassed record-year 2022, according to Corey Geiger, lead dairy economist for CoBank.
“To be fair, 2025 might have had a chance to be even better and break those 2022 records had there not been geopolitical issues on the trade front,” he said. “In fact, the largest catalyst supporting growth in sales was the market conditions in which the U.S. had lower cheese and butter prices when compared to the world’s top two dairy exporters – the European Union (EU) and New Zealand.”
Digging into the numbers
U.S. dairy export volume and value rose to the highest levels in three years.
Sales volume grew four percent when compared to the prior year to reach 5.1 billion pounds of total milk solids, according to Geiger. Those milk solids accounted for 17 percent of total U.S. milk production.
While volume grew four percent, total value of sales grew an impressive 15 percent over the past year to reach $9.63 billion.
Both metrics were just shy of the 2022 all-time records of 5.3 billion pounds and $9.66 billion in sales.
“Speaking of records, Mexico remained the top customer, accounting for 27 percent of exports by value or $2.6 billion in sales,” Geiger said.
Cheese exports led the way, climbing 20 percent from a year ago to reach a record 1.35 billion pounds on what was the 30th anniversary of the creation of the U.S. Dairy Export Council, founded by the nation’s dairy farmers via the Dairy Checkoff.
In 2025, cheese sales topped 110 million pounds in eight of the 12 months last year. Prior to 2025, Geiger said cheese exports had never topped this figure in a single month.
“Sales grew in 32 of the 37 countries that purchased U.S. cheese, with 24 rising by double-digit growth. Mexico was the lead buyer of U.S. cheese and nonfat dry milk and skim milk powder. Lower cheese sales in five major markets were largely due to tariff-related impacts,” he noted.
Butterfat exports proved critical
In 2025, butterfat exports posted an impressive year by skyrocketing 167 percent higher year-over-year to reach 269 million pounds.
“This was the first time butterfat exports exceeded 220 million pounds in one year,” Geiger said. “Although Canada had the largest market share of U.S. butterfat purchases, U.S. sellers diversified market reach with big gains in the Middle East and North Africa, the EU and Mexico, and for the sake of the conversation, most of the butterfat exports to Canada crossed the border for further food manufacturing and return to America for placement on store shelves.”
Had it not been for strong butterfat exports, domestic markets would have been awash in butterfat as production grew from 9.93 billion to 10 billion pounds in 2025. This 4.77 percent growth, when looking at federal order data, represented record growth and momentum throughout the year as June through December posted growth rates from 5.2 to 6.3 percent for butterfat production in any given month, Geiger explained.
“This strong growth in the second half of the year caused spot CME butter prices to fall from the $2.44 per pound on Aug. 1 to under $1.50 by mid-November,” he said. “This provided a market-clearing opportunity as November moved a record 33.7 million pounds and December topped this number at 34.6 million pounds of butterfat.”
Higher butter prices
The market-clearing situation is one of the main reasons spot CME butter prices rebounded to over two dollars per pound by early March.
“Without those exports, there would have been little chance Class III futures rebounded to over $18 per hundredweight (cwt) and Class IV to over $19 per cwt in early March trading on the CME,” he said.
According to Geiger, market volatility will not be going away anytime soon given the strong potential for growth in butterfat output by American dairy farmers. On top of this, geopolitical tensions via tariffs and military conflicts will add more volatility to global trade.
“Given this situation, it would be a good time to look at risk mitigation strategies to secure some milk prices which were not on the board to start this year,” he said.
To some extent, U.S. milk output had mirrored the EU with growth hovering under two percent levels from January through April. Then, output began trending higher with June through November milk moving 3.3 to 4.5 percent higher, Geiger said.
Fran O’Leary is the senior editor for Wisconsin Agriculturist. This article was originally published by Wisconsin Agriculturist on March 16.
