USDEC reports China’s uncertainty, Latin America’s growth to Shape U.S. dairy exports in 2025

USA – The U.S. Dairy Export Council (USDEC) has assessed the key factors that will shape international dairy supply and demand in 2025, highlighting critical influences on U.S. dairy exports. 

According to the analysis, global economic conditions, regional market dynamics, and shifts in production will determine the strength of U.S. dairy shipments in the coming months.  

A report by USDEC indicates that China’s dairy import trends remain uncertain despite recent declines in domestic milk production. 

Chinese farmgate milk prices have been falling for two years due to an oversupply, but year-over-year milk production has dropped since July 2024, leading to lower inventories. 

While this could create demand for imports, a broader recovery depends on the country’s economic performance. 

“China’s economic troubles, including a real estate crisis and high youth unemployment, continue to limit consumer spending,” an analyst reported. 

If these challenges persist, U.S. dairy exports could face increased competition as New Zealand and Australia redirect their products to other markets.  

Meanwhile, Mexico and Latin America have emerged as strong partners for U.S. dairy, with exports reaching record levels in 2024. 

Cheese shipments to Mexico surged, helping offset declining domestic U.S. sales. 

The region accounted for 41% of total U.S. dairy exports in milk solids terms, the highest share recorded. 

Economic trends suggest continued demand, but potential risks include tariff disputes and a drop in remittances, which could reduce consumer purchasing power in several countries.  

The broader global economy is expected to improve gradually, with inflation easing and GDP growth stabilizing. 

The International Monetary Fund projects a global inflation rate of 4.3% in 2025, a decline from previous years. Certain U.S. dairy markets, including Mexico and the Middle East-North Africa region, are expected to experience steady economic expansion. 

A ceasefire deal in the Middle East and the reopening of Red Sea shipping routes may also support trade. 

However, challenges remain, including a stronger U.S. dollar and rising transportation costs, which could make American dairy products more expensive in global markets.  

In Southeast Asia, demand for dairy products is forecast to grow in 2025, though competition remains strong. 

The region has been recovering from high inflation, with GDP growth reaching 4.6% in 2024. New Zealand’s shift in dairy exports to Southeast Asia, driven by declining sales to China, has created additional competition for U.S. suppliers. 

Despite this, U.S. exports in key categories, such as whey and cheese, saw notable gains last year.  

A report by USDEC suggests that U.S. milk production is likely to rebound in 2025 after two years of limited growth. 

Expansion incentives, including favorable margins for dairy farmers and new processing capacity, are expected to support increased output. 

The industry is undergoing significant processing expansions, with new facilities expected to boost cheese, protein, and extended shelf-life milk production. 

“We anticipate that milk production will grow to meet demand, though the speed of expansion remains a key question,” a dairy market expert stated.  

With a recovering global market and increased U.S. production, 2025 presents opportunities for dairy exporters. 

However, economic uncertainties and shifting trade dynamics mean that U.S. suppliers must remain adaptable to maintain their competitive edge.

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