Widespread December gains unable to compensate for sizable decline in NFDM/SMP exports. 

Year-over-year (YOY) U.S. dairy export volume (milk solids equivalent or MSE) fell 1.9% in December dropping the year-to-date (YTD) total to -0.4%. After a huge third quarter in which U.S. exports gained 7% over 2023, the fourth quarter proved a letdown, falling 5% compared to the previous year.

But despite the declines, there were many positive signs in both the December and annual data. To name a couple: U.S. export value jumped 11% in December, putting YTD value up 2% to $8.3 billion—the second highest of all time. (Note: All annual numbers in this post have been adjusted for the 2024 Leap Day.) And U.S. cheese exports posted their 12th consecutive YOY gain in December, setting a December record and pushing calendar-year cheese volume past half a million metric tons for the first time.

Milk powder
Much of the reason for the December and annual volume declines falls to nonfat dry milk/skim milk powder (NFDM/SMP). YOY NFDM/SMP volume plummeted 23% (-14,992 MT) to 49,565 MT in December. It was the first time that monthly U.S. NFDM/SMP sales dipped below the 50,000 MT mark in more than five years—since July 2019. For the calendar year, U.S. NFDM/SMP exports declined 8% (-65,919 MT).

Weaker production and faltering sales to Southeast Asia were the main causes as highlighted by U.S. December shipments to the region plunging by 44% (-8,047 MT). One of the few positives in NFDM/SMP in December came from China, where U.S. suppliers recorded their first YOY increase since December 2022, as Chinese import demand showed continued signs of recovery at the end of 2024—at least temporarily.

Cheese and more
Better December news came from nearly every other product, starting with cheese. U.S. cheese suppliers ended a banner year with a bang, shipping a record 43,846 MT. U.S. shipments for the year rose 17% (+75,702 MT) to 508,808 MT. It was the first time U.S. cheese exports exceeded half a million MT in a single year (and the first time they topped 1 billion lbs.).

Favorable pricing, rising demand in most regions, and a committed market approach by U.S. cheesemakers fueled gains. December growth was widespread, with some of the biggest increases to Latin America, mirroring year-long trends. Leading December buyers included Mexico (+28%, +3,751 MT), the Middle East/North Africa (+123%, +1,621 MT), South America (+121%, +1,462 MT) and Australia (+54%, +963 MT).

*Whey (0404.10) and WPC80+ (3502.20) have been adjusted to account for misclassification of certain whey exports to China.

Whey also finished the year strong, with USDA/Census Bureau data showing YOY low-protein whey (HS Code 0401.10) up 6% in December and high-protein whey (HS Code 3502.20 or WPC80+) up 7% (+489 MT).

YTD Census data shows gains for both as well and paints WPC80+ as having an incredibly strong year on the back of exponential growth to China. However, based on anomalies in the data for exports to China and conversations with USDEC members, we estimate roughly 15,000 MT of low-protein whey was misclassified as WPC80+. As such, with the adjustment, the picture for WPC80+ is much more nuanced and aligns more closely with the tight supply and high priced environment for whey proteins in 2024.

USDEC is working with USDA/Census to get additional clarity on the reporting discrepancy.

In other products, December U.S. lactose exports rose 1%, marking the only YOY increase in the category in 2024.

U.S. butter sales jumped 45% (+894 MT) in December and AMF more than doubled (+799 MT). Total U.S. butterfat exports increased 28% (+9,758 MT) due solely to a strong second half in which volume soared 69% (+10,505 MT) compared to July-December 2023.

For more on 2024 performance and what USDEC expects in the year ahead, see below.

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

NFDM/SMP
U.S. milk powder exports struggled across 2024, and December was no exception as particularly weak performance during the month dragged the annual figure down to the lowest level seen in five years. Tepid global demand contributed to the decline as many global buyers of milk powder slowed their purchases. However, a lack of available supplies also hamstrung the ability of the U.S. to serve some markets, as combined production of NFDM and SMP fell by 14% in 2024. Tight supplies kept U.S. prices elevated and led the U.S. to cede share to other suppliers, especially Oceania.

Looking ahead, stronger global economic performance should help to boost overall milk powder demand. Chinese buying perked up late in 2024 and would be a boon for global demand if it continues. However, tighter supply from the U.S. is expected to persist. With Class III demand expecting to dominate raw milk supplies, fewer skim solids will be available for dryers. A recovery in California milk production in the wake of H5N1 should help to alleviate tension in the short term, but overall, our analysts do not anticipate a dramatic reversal in U.S. milk powder exports.

Cheese
Much has been written about U.S. cheese exports in 2024 and deservedly so as shipments have smashed prior records. With more than 1 billion lbs. of product moving offshore during the year, the U.S. has galvanized its position as a leading global cheese supplier. Competitive prices at the beginning and end of the year, robust supplies, and strong demand from our nearest markets have kept cheese moving offshore at a healthy clip. Cheese exports proved to be essential for the domestic market in 2024, preventing stocks from accumulating as domestic demand lagged.

The well publicized addition of substantial new capacity has uniquely positioned the U.S. to continue growing cheese exports through the coming year. Although some older, less efficient capacity is likely to move out of the system, there should be ample cheese volume available during 2025 to serve the needs of the international market. Trade disputes may distort prices or cause disruptions along the way, but even so, 2025 is poised to be another strong year for U.S. cheese exports.

Butterfat
U.S. butterfat exports improved late in 2024 as the U.S. boasted a significant price advantage over other international suppliers, especially Europe. Butter prices between the U.S. and Europe began to diverge in July, with the gap intensifying in the fourth quarter. On top of competitive prices, upbeat butter and AMF demand from markets like Canada, Central America, and the Caribbean kept U.S. butterfat moving offshore. Despite elevated prices, domestic butter demand was seemingly insatiable as well, but an influx of European butter combined with record high butterfat content in domestic milk supplies kept the larders full and ensured there were also sufficient supplies for export.

Strong butterfat production is expected to continue into 2025, as dairy producers prioritize increasing the component content of their milk. Even as additional milk heads to the cheese vat, the additional fat production should be sufficient to keep butter churns filled. With ample output, the ability of the U.S. to maintain exports will likely come down to a question of price and whether or not U.S. manufacturers are committed to producing butter with the higher fat content preferred by international buyers.

Low-protein whey
According to official Census data, U.S. exports demonstrated mixed performance across the year, though full-year shipments did manage to rise above prior-year levels. However, our analysis suggests that performance was actually stronger than reported because some low-protein products were inadvertently counted in the WPC80+ category. Improved whey demand from Southeast Asia for food applications and piglet nutrition in China helped to prop up U.S. exports, even as the U.S. ceded some share to alternative suppliers.

An improving economy and strong momentum for protein demand should keep global demand for whey products elevated. But production decisions at home may disrupt the ability of U.S. suppliers to service this demand. While cheese production is indeed forecast to grow, which should amplify the available whey stream, new whey processing capacity is disproportionately oriented toward the production of higher protein products like WPC80 and whey protein isolate. As such, it seems likely that supplies of lower protein products will remain tight.

WPC80+
Along with cheese, high-protein whey has been one of the export highlights of 2024 as Census data shows that exports of WPC80+ rose dramatically. Indeed, there have been many positive stories to tell as demand from Colombia and Thailand improved in earnest, while our revised China figure still suggests a sizeable 9% (+1,274 MT) increase to that key market. But after adjusting for the likely overstatement of export volumes to China, the U.S. export picture for high-protein whey products is more closely aligned with the observed market dynamics that included rising prices and strong domestic demand that likely kept exports under pressure.

Global demand for protein is rising markedly and most industry stakeholders expect this trend to persist to the benefit of dairy proteins. With plentiful new capacity installed and imminently rising cheese production likely to ensure the availability of raw supplies, the U.S. is well positioned to experience further gains in high-protein whey exports during the coming year.

Learn more about global dairy markets

• U.S. dairy exports drop 9% in November
• U.S. exports fall 2% in October
• Strong September lifts U.S. dairy exports to best quarter in nearly two years
  

   

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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 post.