US dairy exports are breaking records across multiple product categories, with butterfat shipments and cheese exports both reaching all-time highs in recent months, driven largely by competitive US pricing on global markets.

Butter and cheese exports at historic levels

US butterfat exports hit all-time highs in both November and December, with annual shipments up 166% compared to 2024. Cheese exports told a similar story, with annual volumes surpassing the previous record by 20%.

Canada remains the largest buyer of US butter by value, with year-to-date purchases up 48% year-on-year. Beyond Canada, US butter is finding entirely new markets: Saudi Arabia has climbed to the number two spot with year-to-date value up over 5,400%, while the Netherlands and Bahrain have also recorded sharp increases from a low base.

The driver is pricing. American butter is currently among the cheapest available globally, making it increasingly attractive across Oceania, Europe and the Middle East.

NFDM prices climb sharply

While exports are strong, the domestic picture for non-fat dry milk is tightening. NFDM prices reached $1.765/lb at the CME Call by end of Thursday, up from $1.11/lb in Q4 last year, a 59% increase in just over four months.

The underlying supply picture supports the move. NFDM and SMP production fell to a multi-year low in January, as processors continue rotating toward higher-value proteins, cheese and fresh milk use. Oceanian export volumes are drying up as the season winds down, and with US prices now above European levels, Europe is well-positioned to continue running exports at high volumes, particularly with the dollar gaining value against the euro.

Butter market volatile after geopolitical buying rush

Butter had a turbulent week. Prices briefly traded above $2/lb early in the week, supported by geopolitical buying and the annual new crop cutoff effect, before retreating by Thursday. Cream multiples remain low and a stronger US dollar complicates the export outlook unless US prices adjust lower. Stock levels are well below recent norms, which is supportive for prices, but high production volumes could limit further upside.

Dry whey and cheese markets remain primarily influenced by exchange rates, with domestic US supply high in both categories.

Major investment in US dairy processing capacity

Two significant capital investments were announced in the same week. Bel Group has broken ground on a $200 million expansion of its Babybel plant in Brookings, South Dakota, doubling annual production capacity from 10,000 to 20,000 tonnes. Schreiber Foods is investing $133 million to expand its dairy plant in Pennsylvania. Combined, the two projects represent over $330 million in new US dairy processing capacity, signaling confidence in sustained domestic dairy demand.

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