January volume up 12%, as cheese and butterfat continue to roll and NFDM/SMP posts second straight big gain. 

U.S. dairy exports started 2026 much like they finished 2025: with year-over-year (YOY) double-digit growth. U.S. milk solids equivalent (MSE) volume increased 12% in January, just shy of December’s 13% gain. It was the biggest January on record in MSE volume terms, driven by ongoing growth in cheese and butterfat shipments and—an infrequent sight over the past couple years—double-digit growth in nonfat dry milk/skim milk powder (NFDM/SMP).

The results on the value front were not as stellar: +4% to $740.0 million, as falling prices for U.S. cheese and butter in the back half of the year began to catch up with shipments.

Cheese and butterfat lead
Cheese and butterfat, which set export records in 2025, remain the stars for U.S. dairy exports. U.S. cheese shipments rose 11% YOY to 51,688 MT, which was just above the 2025 monthly export average of 51,087 MT.

While Australia (+46%, +1,436 MT) remains a rising star for U.S. cheese, sales to Latin America remain the engine powering export growth (see below for a deeper dive on U.S. cheese exports to Latin America). The only notable surprise in January cheese results was Japan. YOY volume to Japan fell for the first time in nearly a year, dropping 24% (-1,375 MT) in January. The next couple months will tell whether that is a temporary blip or a more serious shift in purchasing.

U.S. butter sales posted their ninth straight month of triple-digit YOY increases. Volume rose 187% to 9,194 MT. The Middle East/North Africa was responsible for nearly half that gain, with January volume to the region rising by 2,511 MT, an exponential increase over the previous year.

U.S. shipments of anhydrous milkfat (AMF) grew 18% YOY (+685 MT) to 4,583 MT. That was one of the smallest gains for AMF over the past 18 months, although that was largely due to a very strong January 2025. U.S. suppliers shipped what was then a record volume of 3,897 MT AMF last January (a high that has since been surpassed in both November and December 2025). (For more on butterfat sales, with a focus on the latest developments in the Middle East, see below.)

The other big positive in January was NFDM/SMP, which increased 19% (+8,992 MT). It marked the second straight month of big gains for NFDM/SMP, with Southeast Asia leading the way. U.S. volume to Southeast Asia grew 62% (+6,450 MT) and was up 57% (+12,129 MT) over the past two months. That’s good news for U.S. suppliers, however, the gains come against very weak prior-year volumes. In fact, the two-month total for December 2025/January 2026 is the lowest December-January since 2018/19. U.S. suppliers will face a tougher milk powder growth challenge as prior-year NFDM/SMP export volume begins to pick up in March, particularly given the disconnect between U.S. prices and the rest of the world.

Challenges coming
And that’s not the only caution signal ahead. While 2025 ended well and 2026 started on a high note, U.S. suppliers are facing some significant impending headwinds, chief among them the conflict in the Middle East. Closure of the Strait of Hormuz near Iran will immediately curtail shipments to the region, particularly affecting U.S. cheese and butter. Depending on the duration of the conflict, the hostilities could drive global inflation via increased energy and other costs and weigh on world dairy demand.

For more detailed information, as well as interactive charts and data, visit USDEC's Data Hub.

Latin America’s cheese boom
With January data in the books, Latin America remained a cornerstone of the growth of U.S. cheese trade. In fact, U.S. cheese exports to the region rose by 5,868 MT in January, clearly compensating for losses in other parts of the globe (total U.S. cheese trade was up just 5,009 MT). The region accounted for a 56% share of U.S. cheese trade during the month with stronger volumes seen into Mexico, Central America, the Caribbean, and South America.

Mexico remains the single largest destination for U.S. cheese exports. Shipments across the southern border reached 15,788 MT, up 23% (+2,960 MT) compared to the same month last year. While the year-over-year result is impressive, it is against a notably a weak prior year, and it was actually the lowest monthly U.S. export volume to Mexico since March of last year. Even so, Mexico remains a critical component of U.S. exports, and even though some risks to the outlook persist, including domestic instability and a slowdown in remittances, Mexican demand will remain essential to future cheese export growth.

Yet Mexico isn’t the only destination in Latin America experiencing rapid growth. Demand in Central America and the Caribbean continues to accelerate, with U.S. exports into the region rising at an annual average rate of 19% over the last five years. This pace continued into January with exports reaching 10,125 MT (+21%, +1,772 MT), the first time that monthly trade to the region went to five digits. January volumes were particularly upbeat into Guatemala, the Dominican Republic, Costa Rica, and El Salvador.

Not to be left behind, South America also demonstrated solid growth potential in January. Volumes to the region grew 53% (+1,136 MT), mostly due to increased buying from Chile.

Challenges ahead for MENA
Middle East/North Africa (MENA) demand for U.S. dairy, particularly butterfat, started 2026 on a high note, gaining 56% year-over-year. However, tensions in the Middle East will likely stymie this growth as logistics challenges present a major hurdle to business, particularly for perishable products.

Butterfat exports to MENA more than quadrupled to start the year (+332%, +2,536MT), continuing the growth trend of the last several months. What had been a positive economic outlook combined with opportunistic buying helped spur a surge in demand across MENA. Exports to Egypt grew to over 800 MT from practically zero the prior year. Saudi Arabia and Bahrain also contributed to the swelling demand (+1,047 MT and +542 MT, respectively).

Though U.S. butterfat is still competitively priced on the global market and consumer demand in MENA has held steady, exporters face significant headwinds with the current conflict in the Middle East. The closure of the Strait of Hormuz and tensions in the Red Sea present clear hurdles for ships destined for the Persian Gulf. Exports could travel via less typical routes, like the port of Jeddah, or approach through Oman. However, overland shipping infrastructure and limited port capacity will restrict timely movement of product (including perishable dairy products)—all of which contributes to exponentially higher freight and insurance costs.

Positively, North Africa remains open and regional buyers are reportedly eager for product—provided there is a feasible route for it to arrive. Still, if the conflict with Iran is prolonged, we anticipate U.S. butter exports to potentially take a hit given the fact that the Gulf Cooperation Council (GCC) member countries accounted for 15% of U.S. butter exports in 2025.

High prices and low supply constrain WPC80+ exports
As protein demand domestically continues to rise, WPC80+ export volumes fell 31% (-2,101 MT) in January, reaching their lowest levels since January 2023. China saw the largest declines (-70%, -887 MT), but volumes fell to many markets, including Japan (-28%, -556 MT), Canada (-46%, -480 MT), India (-78%, -318 MT), and South Korea (-47%, -154 MT).

Small increases to Europe (+48%, 176 MT) and New Zealand (735%, 152 MT) did little to offset losses elsewhere. As discussed in previous analyses, the decline can primarily be attributed to price and lack of availability.

On price, WPC80+ export values soared in January 2026 to a record-breaking $14,097/MT, up $440/MT from December 2025 and $2,777 from January 2025. Furthermore, with current prices for both whey protein concentrates and isolates substantially above the export levels, further regression in export volume would not be particularly surprising. At these levels, WPC80+ may simply become cost prohibitive for many international customers.

Additionally, the price increase is largely being driven by booming demand domestically. In 2025, U.S. consumers demonstrated a voracious appetite for dairy protein as GLP-1 usage increased and consumers focused on health and wellness. As one example of a wider trend, sales of protein shakes at retail grew 13.1% in 2025, Circana reports.

Given the insatiable appetite domestically, supplies of whey proteins have been limited, even as U.S. production continued to rise (+1.9% over the past 12 months, +4,296 MT). With inventories sitting at a historically low level (-19%, -5,074 MT from January 2025), prices appear unlikely to soften in the near term, and allocation is unlikely to increase until later in 2025 when several new or expanded whey protein dryers come online.

As mentioned in previous export blogs, to account for misclassified product, USDEC continues to adjust U.S. WPC80+ export volume and value.

Learn more about global dairy markets

• Big December lifts annual U.S. dairy export growth to +4% 

• U.S. dairy exports poised for strong finish to 2025
• October U.S. dairy exports jump 7% 

• U.S. dairy export volume up 1.7% through three quarters 
  
  

  Subscribe to the U.S. Dairy Exporter Blog    
  
  

The U.S. Dairy Export Council fosters collaborative industry partnerships with processors, trading companies and others to enhance global demand for U.S. dairy products and ingredients. USDEC is primarily supported by Dairy Management Inc. through the dairy farmer checkoff. How to republish this post.