Robust gains in cheese, butterfat and low-protein whey keep U.S. dairy exports on a record pace 

Followers of this blog will have seen the June trade data recap posted earlier in the week. This follow-up to the June post takes a closer look at first-half trends, growth, and challenges that might lie ahead. USDEC plans to continue doing these deeper dives into U.S. dairy trade on the quarter. 

U.S. dairy exports rose 9% in milk solid equivalent (MSE) terms in the first half of 2026. Robust global demand, particularly for U.S. cheese and butterfat, helped put U.S. dairy trade on a record pace for the year. 

Export value grew 12% to $5.31 billion, a growth rate that, if maintained, would vault annual exports above the $10 billion mark for the first time. Here are some highlights: 

Cheese stays hot 

Over the last five years, U.S. cheesemakers have added more than 500,000 MT of new cheese capacity (as well as commensurate whey volume). That far-sighted thinking prepared the United States to meet the surge in global cheese demand we’ve seen over the last 2.5 years. 

In 2024, U.S. cheese exports rose 18% to a record 510,270 MT. In 2025, they jumped 20% to 612,671 MT. Six months into 2026, they grew another 24%, well on their way to over 700,000 MT for the year and a third consecutive record performance. 

Second quarter 2026 year-over-year (YOY) growth even strengthened a bit from the first quarter, rising to +24.2% from +23.2%. With U.S. milk production rising and significant additional cheese capacity online, the U.S. is better positioned than any major cheesemaker to meet the world’s growing cheese needs, and U.S. suppliers are doing a commendable job of earning that business. 

U.S. export success in the first half of 2026 was geographically widespread. Year-over-year shipments to our No. 1 market, Mexico, grew 32% (+30,224 MT). Exports to our No. 2 market, South Korea, jumped 36% (+13,653 MT). Shipments to Central America rose 25% (+7,735 MT); Southeast Asia was up 55% (+6,628 MT); and volume to South America increased 31% (+4,708 MT). What’s more, growth extended across all HS subcategories, with double-digit gains in natural cheese (e.g., cheddar and colby), fresh cheese (e.g., mozzarella and cream cheese), grated and powdered, blue, and processed. 

Comparative U.S. cheese prices have supported U.S. export growth. Although the gap has narrowed in recent weeks, U.S. cheese has typically enjoyed a meaningful price advantage over the European Union (EU) and New Zealand since late 2024. 

Looking ahead, while the U.S. appears well-positioned to continue cheese export expansion, a couple potential headwinds bear watching. After rising 37% in 2024 and 28% in 2025, U.S. cheese exports to the Middle East/North Africa (MENA) fell 17% (-3,208 MT) through the first six months of 2026. Logistical challenges (caused by the war in the region) have so far affected cheese demand and exports far more than butterfat. Similarly, the potential for Middle Eastern shipping disruptions to stoke global inflation gets more likely the longer the fighting continues. Higher inflation tightens pocketbooks and nonessential food spending, including foodservice (a major cheese user). But for now, U.S. cheese remains on a roll. 

Protein demand leaves less WPC80+ to export 

Amid increasing GLP-1 usage and broader cultural attention on health, domestic demand for high-protein whey has been insatiable. So insatiable, in fact, that less of it is available for export. WPC80+ exports have fallen 21% (-8,482 MT) so far this year as a result. Volumes declined to almost all major regions, including South Korea, China, Canada, South America, and Europe. 

It’s hard to overstate the strength of domestic demand for whey protein concentrates (WPCs). Far from just an ingredient in sports nutrition products, it now has applications across the food and beverage industry, including fortifying protein levels in other dairy products. Broader usage and increased focus on protein consumption are both contributing to stronger demand.

More processing capacity is slowly coming online—production of WPC50-89 grew 4% and production of whey protein isolate (WPI) increased 7.5% so far this year, but prices demonstrate the extent to which demand is outpacing supply. WPC80 prices rose 60% in 2025, and by June 2026, buyers were facing another 76% increase, turning a $10,000/MT purchase in January 2025 into one costing nearly $29,000/MT in June 2026.

Although most acutely felt in the U.S., protein demand and processing capacity limitations are dampening export availability worldwide. Even as prices soar, global WPC80+ trade has fallen nearly 7% (-5,252 MT) YTD as small increases in exported volumes from other markets are unable to compensate for the steep drop in U.S. exports. 

So far this year, New Zealand has exported 12% more WPC80+ (+1,227 MT), and the UK has increased shipments 7% (+614 MT). The world’s second largest supplier, the EU, has increased exports only 0.7% (+175 MT), despite price signals that demand more. 

Prices seemed to have turned a corner by early August, sitting 3% below mid-July peaks. However, with demand still incredibly strong globally and supplies structurally insufficient until additional processing capacity is activated, manufacturers may be sitting on the sidelines until prices ease further or may be reformulating away from WPCs altogether. 

Butterfat continues to impress 

Source: NMPF-USDEC, U.S. Census Bureau 

Butterfat exports have been one of the standout stories of 2026, building on momentum carried over from last year. Volume has more than doubled year-over-year in several months and come close to it in others. Even June's slower pace largely reflects tougher YOY comparables (as volumes are now lapping already-strong 2025 numbers) rather than any real loss of steam. This growth rests on a straightforward dynamic: U.S. supply is abundant, prices are competitive, and buyers around the world are responding. 

Strong supply-side dynamics in the U.S. butter market underpin this rise in exports. The strength of U.S. milk production has been well documented over the past year, and growth in fluid milk combined with stronger milkfat output has pushed butter production up 7% over the past 12 months. With ample supply on hand, U.S. butterfat has remained competitively priced in the global market for 18 months running. Buyers have taken notice and international demand for U.S. butter has grown exponentially. 

The biggest source of growth has been the Middle East/North Africa (MENA), despite geopolitical tensions and shipping disruptions tied to the extended closure of the Strait of Hormuz. That closure reshaped trade within the region, as product was increasingly rerouted through Saudi Arabia rather than shipped directly to Bahrain, Qatar, and the UAE. The disruption didn't stop trade; rather, trade has kept growing. Across the region as a whole, butterfat trade from the U.S. is up more than 400% in the first half of the year, and H1 2026 volumes have already surpassed full-year 2025 butter exports to the region. Given that demand has persisted through geopolitical turmoil, butter exports to MENA look poised to stay strong, particularly with market dynamics still favorable. 

MENA may be driving the bulk of the growth, but it's far from the only contributor. U.S. butter exports are up almost across the board: Korean demand has nearly tripled in the first half of 2026, and butterfat exports to Japan have jumped 383% year-to-date (YTD). Growth was more modest in Canada, but it remains the largest buyer of U.S. butter, up 5% versus H1 2025. This geographic diversification bodes well for continued growth. It reduces the risk that a downturn in any single region derails momentum and gives U.S. suppliers more outlets for a growing volume of butter. 

As the saying goes, the U.S. hasn't put all its eggs (or butter) in one basket. The breadth of this export growth lays valuable groundwork for future trade. With U.S. production projected to keep climbing, these export markets will only become more important to supporting the domestic butter market. 

High prices hamstring powder exports 

U.S. milk powder exports have the odds stacked against them. Scant domestic production and high prices have created significant challenges for exporters of nonfat dry milk (NFDM) and skim milk powder (SMP). Despite starting the year on a solid note—albeit against particularly weak performance in early 2025—these challenges have become more apparent in recent months. 

Over the first half of 2026, U.S. exports of NFDM/SMP totaled just shy of 321,700 MT, down 3% (-10,614 MT) from last year and representing the weakest performance over this period since 2017. 

Voracious consumer demand for protein has driven skim solids away from dryers and towards other uses. As a result, combined production of NFDM and SMP slipped to just 981,000 MT in 2025, the lowest volume since 2013. Faced with such limited supplies, buyers caught without product earlier in the year were forced to pay significant premiums to meet their needs. Spot prices for U.S. NFDM reached as high as $2.295/lb. ($5,060/MT) in May before descending to more historically coherent levels, averaging $1.5675/lb. ($3,456/MT) the first week of August. Even as suppliers from other regions capitalized on the situation to raise their own values, U.S. product was simply too expensive for global buyers. 

Source: NMPF-USDEC, U.S. Census Bureau

Given the time elapsed between when product is contracted and when it is shipped, it often takes several months for pricing dynamics to manifest in the trade data. Furthermore, long-term contracts during which prices were locked in at a lower rate may further obfuscate how prices are impacting demand. As such, average U.S. export values for NFDM/SMP climbed continuously over the first half of the year, rising as high as $3,979/MT in June, the most recent month for which data is available. 

The pricing roller coaster took the biggest hit on shipments to Mexico which tumbled by 6% (-11,166 MT) during the first half of 2026. Mexico is the largest buyer of U.S. milk powder, accounting for more than a quarter of U.S. exports and benefitting from privileged tariff treatment and logistical advantages. However, even for this stalwart customer, high prices proved too large a barrier to overcome. Similar impacts were also seen in other regions as shipments during H1 were down by 21% (-4,163 MT) to Central America and the Caribbean, 9% (-2,230 MT) to South America, and 55% (-1,239 MT) to MENA. 

At first glance, it appears curious that despite numerous challenges, U.S. exports to Southeast Asia have remained upbeat so far in 2026, growing 10% (+8,610 MT) over the first half of the year. However, a closer analysis of the data suggests that long-term pricing contracts, especially with the Philippines, have insulated buyers in the region from the most severe price increases. Average export values to the region remained under $3,000/MT for the first five months of the year. In June, when average values climbed to $3,340/MT, exports fell by 22% (3,798 MT) year over year. 

While the situation should normalize in the coming months, the fundamental issues facing U.S. milk powder exports are likely to persist. Product is likely to remain tight as persistent consumer demand trends pull protein away from the dryer. Combined production of NFDM/SMP was up 6.6% year to date, but output fell anew in May and June. While tight supplies are likely to keep prices supported it has become clear that when U.S. prices rise above international competitors, milk powder exports are to face an uphill battle. 

Learn more about global dairy markets

• U.S. export growth streak runs to seven months
• March makes it six straight months of year-over-year export growth
• U.S. extends dairy export growth streak in February
• Dairy exports start strong in 2026
  
  

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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 p