Despite significant global economic volatility, US dairy markets are demonstrating resilience, maintaining stability where financial markets have faltered. According to the latest Vesper US Weekly market analysis, dairy fundamentals continue to drive pricing more than external economic factors—though emerging trade issues could reshape export dynamics in coming months.

US dairy production shows mixed signals in February

February production numbers for key US dairy commodities revealed interesting trends, with butter, nonfat dry milk (NFDM), mozzarella, and whey protein isolate (WPI) all posting notable increases. When adjusted for the leap year’s additional day, these products led growth in the domestic production landscape.

“Most reasons why all these volumes were looking strong in February this year are quite straightforward,” notes the Vesper analysis. “Butter production was up as the availability of milkfat is extremely high, NFDM was up as the export opportunities of SMP on the global market are dwindling, while mozzarella and WPI are priced very favorably compared to other types of cheese or whey.”

However, not all sectors showed growth, with cheddar cheese production proving “quite underwhelming” despite expanded production capacity, and dry whey volumes also falling below expectations.

90-day tariff delay creates market uncertainty, negotiation window

The most significant development affecting agricultural markets has been the sudden 90-day delay in implementing new tariffs, creating both breathing room and uncertainty. This development has sent financial markets on what Vesper describes as “a rollercoaster ride,” with brief recoveries followed by renewed downward pressure.

The delay opens a negotiation window between the US and various countries/regions worldwide. European dairy buyers have already moved proactively, securing increased volumes rather than waiting for potential trade disruptions.

US-China dairy trade under severe pressure

While many tariff implementations have been postponed, the US-China trade relationship remains particularly strained. Compounding tariffs have reached alarming levels, with US imposing approximately 145% tariffs on Chinese goods, while China’s retaliatory tariffs stand at 84% on US products—with expectations these could soon reach triple digits.

This escalation creates significant challenges for US dairy exports, particularly in whey products. China represents a crucial market, consuming approximately:

  • 150 million pounds of US dry whey exports (from a total of 400 million pounds exported)
  • 67 million pounds of higher proteins like WPC 80%+ (from a total of 195 million pounds exported)

“What we do know with certainty is that US dairy has lost its price competitiveness against European suppliers in China—even favorable currency swings can’t mitigate the inflation in landed costs,” states the Vesper analysis.

European dairy consolidation continues

In other significant industry news, Arla Foods and Germany’s DMK Group have announced plans to merge, creating Europe’s largest dairy cooperative with €19 billion in combined annual revenue. The merger would unite over 12,000 farmers and process nearly 19 billion kg of milk annually, with a final vote set for June and regulatory approval expected by year-end.

Global cheese market projected to reach $105.9 billion by 2026

The cheese market continues to show robust growth globally, driven by economic growth, westernizing diets, and rising fast-food consumption—especially in Asia-Pacific. Functional cheeses with health benefits are gaining traction, while regional preferences continue to evolve, with Europe emphasizing sustainability, the Americas preferring clean-label products, and Asia experiencing rapidly growing demand.

For complete insights, detailed market data, and Vesper’s new cost modeling feature that helps procurement teams calculate and compare exact landed costs from different origins, visit the Vesper platform today. The full Vesper US Weekly Edition 52 analysis is available exclusively here: https://app.vespertool.com/market-analysis/1852