Trump: 'Canada Has Been Ripping Us Off for Years'
Published: Friday, March 21, 2025
The following is from Lee Mielke, author of a dairy market column known as "Mielke Market Weekly."
The Trump tariff tit-for-tat morphed, and dairy became front and center. President Trump stated earlier this month: "Canada has been ripping us off for years on lumber and on dairy products," and he cited Canada's 250% tariff on U.S. dairy exports, warning that the U.S. would match those tariffs. Canada's supply management program has long been a bone of contention for the U.S. dairy industry and it remains a "sacred cow" among Canadian dairy farmers.
Meanwhile, China lifted its ban on milk and dairy products from Germany, which could hurt U.S. dairy exports to that country, especially on whey protein. And, Reuters reported, "China announced tariffs on over $2.6 billion worth of Canadian agricultural and food products on Saturday (March 8), retaliating against levies Ottawa introduced in October."
The European Union placed tariffs on U.S. feed grains in response to Trump's levies on steel and aluminum, which will hurt European livestock producers. Trump cited the large EU trade surplus for his actions.
Becky Rasdall Vargas, senior vice president of trade and workforce policy at the International Dairy Foods Assn., stated: "It is accurate that Canada imposes a tariff of approximately 250% on U.S. exports of certain dairy products into Canada, and even more with Canada's 25% retaliatory tariffs in place. However, that tariff would only apply if we were able to reach and exceed the quota on U.S. dairy exports agreed to under the U.S.-Mexico-Canada Agreement (USMCA). Frustratingly, the U.S. has never gotten close to exceeding our USMCA quotas because Canada has erected various protectionist measures that fly in the face of their trade obligations made under USMCA."
"U.S. dairy is grateful for the Trump administration's efforts to hold Canada accountable on these protectionist measures," said the IDFA. "At the same time, a prolonged tariff war with our top trading partners will continue to create uncertainty and additional costs for American dairy farmers, processors and our rural communities. We urge Canada and the United States to negotiate a resolution to these issues, both Canada's trade barriers to U.S. dairy exports and the tariffs, as expeditiously as possible."
Back on the home front, the overall U.S. economy is showing signs of strength. Unemployment on March 7 showed job growth in most major sectors and CPI data last week was weaker than expected, although still well above the 2% federal mandate. Jobless claims have also fallen.
Checking demand, the USDA's latest Dairy Supply and Utilization report showed that domestic cheese demand slipped about 1% in January from a year ago.
Cheese exports, however, were up 21.8% and picked up the domestic slack, so overall disappearance was up .7%, according to HighGround Dairy's Curtis Bosma in the March 17 Dairy Radio Now broadcast. Bosma added that the U.S. is not typically a major cheese exporter, but there was enough exported in January to offset the lower domestic demand.
Butter production has been running high, thanks to an abundant cream supply, he said. Butter demand domestically was down for the second month in a row, off 3.3% from a year ago. However, exports were up, so overall usage was only down 2%. Again, Bosma stated that we are not typically a major butter exporter but actually a net importer. However, cheap U.S. prices on cheese and butter have made the U.S. competitive on both.
That said, Bosma pointed out that there are different spec issues in terms of what kinds of butter and cheese are made in the U.S., versus what global buyers are looking for, so price is not the only factor. He also cited the ongoing tariff issues as a factor and said Mexico is a very important market for U.S. cheese and represents 35-40% of U.S. cheese exports.
Nonfat dry milk was "the dog" of this report, he said. Powder demand has been struggling the past year or so as production is significantly outpacing demand. Both domestic and global demand was hurting, making overall utilization down 20.7% from a year ago. This caused stocks to swell, he concluded, up 42% from a year ago at the end of January.
Dry whey utilization was down 4.9% overall, with domestic use down 13.9% while exports were up 10.1%, according to the USDA.
Speaking of net imports, last week you'll recall, I reported that U.S. milk equivalent exports in January were up 1.1% from a year ago. On the other side of the coin, the U.S. imported 37.9 million pounds of cheese, up 21.8% from a year ago. Butter imports amounted to 16.7 million pounds, up 28.2%.
And while fluid milk sales saw a nice 2.6% rise in December from a year ago, January sales tipped back a bit. The USDA's January data shows packaged sales at just under 3.9 billion pounds, down .5% from January 2024. Conventional product sales amounted to 3.6 billion for the month, down 1% from a year ago. Organic sales, at 276 million pounds, were up 6.5% from a year ago, and represented 7.2% of total milk sales in the month.
Whole milk sales totaled 1.4 billion pounds, up 1.4% from a year ago. Whole milk represented 35.8% of total milk sales for the month. Skim milk totaled 161 million pounds, down 5.3% from a year ago.
The figures represent consumption in federal market orders which account for about 92% of total fluid sales in the U.S.
The Agriculture Department again lowered its milk production forecast in its latest World Agricultural Supply and Demand Estimates (WASDE) report, citing lower expected output per cow more than offsetting slightly higher cow inventories.
2025 production and marketings were projected at 226.2 and 225.2 billion pounds, respectively, down 700 million on both. If realized, both would still be up 300 million pounds, or .1%, from 2024.
Imports were unchanged on a fat basis and reduced on a skim-solids basis. Exports were lowered on a fat basis, primarily due to lower cheese exports. On a skim-solids basis, exports were lowered due to lower expected shipments of cheese, dry skim milk products and lactose. Domestic use was increased on both a fat and skim-solids basis, according to the WASDE.
Cheese, butter, nonfat dry milk (NDM) and whey price forecasts were all lowered, based on recent prices. The Class III milk price was lowered on the lower price expectations for cheese and whey. The Class III was projected to average $17.95 per hundredweight, down from last month's estimate of $19.10, and compares to the 2024 average of $18.89 and $17.02 in 2023.
The Class IV price estimate was also reduced, due to lower butter and NDM prices. It is projected to average $18.80, down from $19.70 a month ago, and compares to $20.75 in 2024 and $19.12 in 2023.
This month's corn outlook was unchanged, but the report stated, "U.S. tariffs on Canada and Mexico have been suspended until April 2 for all products covered under USMCA which include most agricultural products in the WASDE. Reciprocal tariffs are also scheduled to begin on April 2. However, until these are in effect, WASDE does not incorporate them into commodity forecasts."
The season-average corn price was unchanged at $4.35 per bushel. Global production was forecast 3.2 million tons higher to 1.496 billion. This month's foreign coarse grain outlook is for larger production, reduced trade, and smaller ending stocks relative to last month. Foreign corn production is higher as increases for India, Russia and Ukraine are partly offset by declines in South Africa and Mexico.
Soybean supply and use projections were unchanged this month but included higher exports and lower soybean oil used for biofuel. The season-average soybean price was projected at $9.95 per bushel, down 15 cents from last month. Soybean meal and oil prices were unchanged at $310 per short ton and 43 cents per pound, respectively.
Global soybean supply and use forecasts include nearly unchanged production, higher crush and lower ending stocks. Higher production for Ukraine, Mexico and Australia is offset by lower production for South Africa, says the WASDE.
The week ending March 1 saw 56,100 dairy cows sent to slaughter, up 4,500 from the previous week but 3,700, or 6.2%, below that week a year ago. Year to date, 427,600 head had been culled, down 89,100, or 17.2%, from a year ago.
Cash dairy prices remained volatile in the unsettled tariff impacted waters. After dropping almost 30 cents the previous two weeks, the Cheddar blocks marched back up to $1.7550 per pound last Thursday, but they closed last Friday at $1.6925, 7 cents higher on the week, and 22.25 cents above a year ago.
The barrels sunk to $1.6050 per pound last Monday, lowest CME price since Dec. 2, 2024, but they rallied to $1.73 last Thursday, only to close last Friday at $1.69, up 6 cents on the week, 24.75 cents above a year ago, and only a quarter-cent below the blocks. Sales totaled 26 loads of block on the week and 13 of barrel.
StoneX stated in its March 11 Early Morning Update, "Cheese demand domestically remains weak while the market expects more milk in the coming months and we battle with the threat of reciprocal tariffs, more so in Canada and China it seems, but that could change next week."
On a brighter note, StoneX said the good trading we're seeing "kind of legitimizes the idea that there is good demand for cheese, at least around current levels." Keep in mind, world cheese is selling above $2 per pound.
Cheesemakers in the Central U.S. continue to say production is active, according to Dairy Market News, despite some plants being down due to inventory or maintenance activities. Cheese availability has grown. Some contacts say they are now able to offer a few more loads on the spot market than in previous weeks. For most cheesemakers, this has been a rare opportunity for most of 2025. Milk availability is somewhat stable when compared to previous weeks. Mid-week spot milk prices ranged $2-under to 25 cents-over Class III. Last year, they ranged $3.50-under to 50 cents-over Class III. Despite some bullish market price movement last week, more cheesemakers and market contacts view near-term tones with uncertainty, according to DMN.
Demand for Class III milk from Western cheese manufacturers is steady and seasonally strengthening milk production is sufficiently accommodating demand. Cheese production is mixed. Some vats were less busy recently due to some unplanned downtime. Although lighter production schedules are few, some manufacturers describe their inventories as snug. Cheese demand varies from moderate to steady, according to DMN.
CME butter crept to $2.34 per pound last Wednesday. It closed last Friday at $2.3425, up 3.25 cents on the week, but 48 cents below a year ago. There were 38 sales on the week, with 22 on Tuesday alone.
Central butter plants say retail customers are starting to show more interest ahead of the spring holiday season. Food service demand has been lackluster. Production has been very active, but cream offers have finally begun to slow. This was an expectation ahead of the spring holidays but cream is still widely available, though multiples are starting to tick higher week by week. Last year during week 11, multiples ranged from 1.14 to 1.27, whereas this year at mid-week they ranged from .95 to 1.08. Butter availability is ample, says DMN.
Affordable cream continues to be readily available in the West, though demand is slightly stronger. Cream multiples are holding steady. Plenty of cream continues to make its way to the churn. Butter production is seasonally stronger, and inventories are building for later seasonal demand and storing for later seasonal micro-fixing. Butter demand is moderate to steady. Domestic prices are competitive with international prices, but unsteady factors are creating some reluctance from international buyers, according to DMN.
The March 13 Daily Dairy Report says cream multiples have not been this low since the height of the COVID pandemic and milkfat is pouring into Class II products and butter churns.
Grade A nonfat dry milk regained a little ground this week, inching back to $1.16 per pound last Tuesday, but gave it back last Friday, closing at $1.1550, unchanged on the week, and .75 cents below a year ago, with nine sales on the week.
Dry whey closed last Friday at 45 cents per pound, down 4 cents on the week, lowest since June 5, 2024, but still a half-cent above a year ago. There were five sales on the week at the CME.
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