NFDM/SMP gains for first time in six months, cheese posts second highest month ever.

Despite (or perhaps because of) the preponderance of uncertainties that lie ahead related to tariff actions, supply chains challenges and the global economy, year-over-year (YOY) U.S. dairy export volume (milk solids equivalent or MSE) grew 3% in March. It marked the highest monthly U.S. dairy export volume since February 2023.

The March increase almost brought the first-quarter back to even. Through the first three months of 2025, total U.S. dairy exports lagged the previous year by just 0.5%. U.S. export value over the same period grew 14% to $2.3 billion—a first-quarter record.

Most major products gained or at least held their own in March. Among the highlights:

• Nonfat dry milk/skim milk powder (NFDM/SMP) had its best month since last summer.
• Butterfat continued to surge.
• Chinese low-protein whey buyers rushed to beat retaliatory tariffs.
• U.S. cheese posted its second-best month ever, falling just short of the monthly record that was set exactly a year earlier.

Temporary whey rebound?

YOY U.S. low-protein whey shipments grew 3% (+1,351 MT), as China stocked up on U.S. whey before the biggest retaliatory tariff hikes took hold. China began applying an additional 10% retaliatory tariff on U.S. dry whey and whey protein concentrate in mid-March, even as U.S. whey permeate remained exempt from that increase. However, all three products ran into an additional 125% tariff in early April.

Buyers who got in under the wire drove total YOY U.S. low-protein whey exports to China by 34% (+5,784MT) in March—in line with the year-to-date (YTD) trend. While those are hefty gains, it would be extremely surprising if demand continued to weather the full weight of the retaliatory tariffs that started in April.

U.S. butterfat eyes record

U.S. butter continued to capitalize on favorable competitive pricing, with international butterfat prices remain at or near historical highs. YOY U.S. butter exports jumped 171% (+3,855 MT) in March, while AMF shipments grew nearly four-fold (+1,595 MT). There are few indicators suggesting that price advantage is going to evaporate soon. Through a quarter of 2025, U.S. butterfat exports were 23,878 MT, just over a quarter of the annual record of 90,430 MT set in 2013.

Canada fueled the March increase, with YOY U.S. butter volume up 172% (+2,479 MT). Saudi Arabia (+585 MT) and South Korea (+351 MT) also helped. On the AMF side, exports to Mexico rose exponentially—from 26 MT in March 2024 to 1,400 MT this year.

While the unknowns remain numerous moving forward, March was a welcome upturn for U.S. fortunes.

For a deeper dive on cheese and NFDM/SMP, see below.

All numbers have been adjusted for leap year. Whey volumes have been adjusted to account for misclassification of certain U.S. whey shipments to China.

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

U.S. cheese holds its own

It had to come to an end at some point. After 14 straight monthly YOY gains, U.S. cheese exports declined 1% (-734 MT) in March. It was nonetheless a solid performance. At 49,287 MT, U.S. March exports would have trounced just about every month on record. Export volume was the second highest in history—but it was up against the highest month in history: March 2024, when U.S. suppliers shipped a record 50,022 MT.

As has been the case through most of the U.S. cheese growth streak, volume was driven by a geographically diverse customer base. March saw solid gains to Japan (+32%, +1,614 MT), Southeast Asia (+90%, +1,080 MT), the Caribbean (+19%, +417 MT) and Central America (+7%, +344 MT). U.S. sales to our top customer, Mexico, inched up 1% (+121 MT), reaching their highest level this year (15,405 MT).

Those increases were offset by declines to the Middle East/North Africa (-32%, -1,446 MT), Australia (-46%, -1,401 MT) and South Korea (-15%, -1,073 MT).

Digging deeper into cheese styles, U.S. cheddar continued to grow, posting its fifth straight monthly YOY gain, this time driven by Japan. Exports hit 9,883 MT, a volume not seen since 2014. But cheddar and other mixtures negated the gain, keeping HS 0406.90 flat overall for the month.

Processed cheese (HS 0406.30) also continued its growth streak (11 months and counting). But YOY grated and powdered cheese exports to Australia halved in March, dragging down HS 0406.20 as well as the entire cheese category.

Moving forward, U.S. suppliers are facing strong prior-year results again in April and May. At the same time, pricing remains in favor of American products, particularly given recent changes. At this week’s Global Dairy Trade auction, cheddar prices soared 12% to US$5,519/MT, extending the gap between Oceania and the U.S. and more than making up for recent gains in CME block prices.

First positive month for NFDM in six months

U.S. NFDM/SMP exports ticked up slightly in March (+1%, 909 MT) making for the first positive month of YOY trade in six months. Most of the growth came from increased volume to Mexico (+27%, +7,213 MT)—although likely due more to favorable YOY comparables with softer imports in March of last year than a strong rebound in demand this year. Unsurprisingly, exports to SEA (-20%, -4,467 MT) and MENA (-79%, -2,559 MT) were down in March continuing the trends we’ve seen in both regions over the last six months.

We’ve discussed in past reports that one of the key factors driving the weaker U.S. NFDM/SMP export volume is price. From September of last year through mid-March of this year, U.S. NFDM/SMP was priced at a premium to the EU and New Zealand (roughly 8%). Since then, U.S. prices have eased and are now sitting at a roughly 6% discount – in part due to a slight recovery in domestic production (however, still weak overall), but also due to simply softer global demand, which is keeping prices muted.

With U.S. prices competitive again with global suppliers, expect some renewed interest in U.S.-origin product. However, the threat of tariffs is causing some global buyers to balk at buying U.S. product out of fear of tariff placement while product is in transit, despite most countries’ decisions to refrain from retaliatory measures at this stage. China, however, has already placed new retaliatory tariffs on U.S. goods ranging from 125%-135%. While China represents only about 2% (11,000 MT) of U.S. NFDM/SMP exports, the prohibitively high tariff creates additional pressure on U.S. prices in an already challenging environment. Unfortunately, in the near-term, this uncertainty from tariffs will likely mean U.S. prices will remain at a discount.

Over the next few months, with stable to softer production of NFDM/SMP keeping some upward pressure on price and challenges on the export side putting some downward pressure on price, expect prices to remain relatively rangebound. However, with the trade policy environment evolving quickly, we could see some volatility as the market reacts to any changes.

Learn more about global dairy markets

• Weaker milk powder sales weigh on otherwise positive dairy exports

• U.S. dairy exports inch up to start 2025

• U.S. dairy exports drop 1.9% in December; finish year down 0.4%

• U.S. dairy exports drop 9% in November
  
  

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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.