This post covers a different view of the shifting dairy business. The three Tables in this post show the shifting dynamics for the 12-month averages ending in April 2024, 2025, and 2026. Six main dairy products are covered in these Tables. Following the Tables, the changes in each of these dairy products will be analyzed.
A long-standing business like the dairy industry should be stable. It is very volatile.
Through the three periods in the above Tables, domestic disappearance (consumption) of cheese has not changed. In the 12-month period ending in April 2024 consumption was 1129 million pounds of cheese per month. In the 2025 period it was nearly identical with 1123 million pounds of cheese pounds per month. In 2026 it was 1130 million pounds per month. The consumption of cheese in the U.S. has been very stable.
Production of cheese was very stable through the 2024 and 2025 periods. In the 2026 Table cheese production increased by 3%. Where did the excess cheese go? Exports increased by 82%.
What happened? Wholesale cheese prices dropped by 40%.
Imports have been very low and stable.
Volatility has been significant.
Butter domestic disappearance increased by 9% in the period ending in April 2025. Production had increased by 5%. Wholesale prices of butter increased significantly.
In the April 2026 Table, domestic disappearance dropped by 3% and production increased by 6%. Exports increased 137%. Wholesale prices of butter fell significantly. Major volatility in production, domestic disappearance, and prices have made significant volatility.
Why did butter consumption decrease in the period ending in April 2026? With higher butter retail prices, some consumers opted to use plant-based products that are less expensive and like butter. Pricing changes can cause volatility.
NDM and SMP are very similar but different products. NDM is a U.S. product meeting the U.S. standard. SMP meets the European standard which is slightly different and global. Currently NDM makes up 83% of this mix.
The NDM and SMP is mostly exported, and the majority is exported to Mexico. International pricing competition has decreased U.S. exports and therefore production has decreased by 7% in April 2025 period and stayed at the lower level in the April 2026 period. This U.S. volatility in exports is caused by international pricing.
Lactose and whey protein are stable in production, domestic disappearance and exports. The decrease in domestic consumption of dry whey in the 2026 chart is primarily from international demand and pricing competition. Yes, more dairy volatility.
Why is there volatility in the U.S. dairy industry? The largest volatility element is exports. Cheese is a prime example of this. The U.S. has created favorable trade agreements, particularly the United States-Mexico-Canada Agreement and have secured valuable foreign market access. The revenue per unit in exports is typically less than domestic prices. The buildup in cheese production without an increase in domestic disappearance created more volatility.
Businesses with great volatility must build in safe guards to assure that funds are available in “bad” times.
