The US dairy market experienced volatility this week as exchange rates, trade developments, and macroeconomic policy created competing pressures.

NFDM prices rose throughout late last week but fell sharply over the last two days as the exchange rate turned against US exports. The USD gained momentum while the euro lost value. European cheese is now cheaper in euro terms and the euro itself has lost value, making the US less competitive. With production still expected to remain very high, not being able to export as much would definitely hurt the US dairy industry.

President Trump and President Xi met in South Korea on Thursday, resulting in specific commitments after months of escalating tensions. China agreed to pause rare earth export controls for one year and committed to concrete soybean purchase volumes: 12 million metric tons this season, followed by 25 million metric tons annually for the next three years.

Dairy wasn’t specifically mentioned in the agreement. China’s Ministry of Commerce used vague language about both sides agreeing to “expand agricultural trade,” which is considerably better than the escalatory rhetoric that dominated recent months but offers no concrete commitments for dairy products.

The practical impact on US dairy markets remains relatively low until dairy receives specific attention in future negotiations.

The Federal Reserve cut rates by 0.25% despite inflation running at approximately 3%. The Fed’s justification: strip out the direct impact of tariffs, and core inflation measures look closer to the 2% target. Consumers aren’t experiencing core inflation; they’re seeing the full impact, tariffs included.

Food service is taking a hit as households increasingly choose to eat at home rather than pay restaurant prices. This shift from food service to retail has implications for dairy demand patterns, as these channels consume different product mixes with less commodity cheeses in particular.

Other markets found some fuel to increase slightly as the holiday season approaches. There is plentiful supply of butterfat available at lower prices, but consumption also peaks at the end of the year.


This newsarticle is part of a more comprehensive US dairy market analysis. For the full analysis, visit: https://app.vespertool.com/market-analysis/2409