Cheese Consumption Rising, but Not Keeping Pace
Published: Friday, March 27, 2026
U.S. cheese consumption hit an all-time high in 2025, according to data from USDA's Economic Research Service. However, cheese consumption is not keeping up with cheese output. The Agriculture Department issued December and January Supply and Utilization data on March 13, as both were delayed by the previous government shutdown. Highlights from the January data follow.
Cheese utilization totaled 1.29 billion pounds, up 5.7% from January 2025, and marked a record for the month of January, according to HighGround Dairy, due to domestic utilization and exports setting highs for the month. Domestic use hit just under 1.2 billion pounds, up 5.2% from January 2025, while exports, at 114 million pounds, were up 10.8% from a year ago.
Butter disappearance totaled 213.1 million pounds, up 14.6% from a year ago, exceeding 200 million for the first time ever, according to HighGround. Domestic usage hit 192.8 million pounds, up 7.8%, while exports came in at 20.3 million, up 185.9%. HighGround says November's data was "abysmal" but "turned out two very strong months in December and January, both totals set monthly records, and on a 30-day adjusted basis, December ranked third all-time."
Dry whey totaled 73.7 million pounds, up 1.9% from a year ago. "Robust export volumes narrowly offset record low January domestic use," said HGD. "In contrast, although total whey protein concentrate utilization was positive year-over-year, it was due to strong domestic consumption while exports languished."
Nonfat-skim milk powder utilization hit 189.3 million pounds, up 20.8% from a year ago. Domestic use was up 23.9% and exports were up 19.2%. Both were up year over year for the first time since May 2025, according to HGD. "However, totals are not overly robust, and smaller than in other years."
Fluid milk sales took a dip starting in 2026. USDA's latest data showed January packaged sales at 3.766 billion pounds, down 2.3% from January 2025, and followed a 1.2% slippage in December. Conventional product sales totaled 3.5 billion pounds, down 2.1% from a year ago. Organic sales, at 261 million, were down 5.4%, but represented a typical 6.9% of total milk sales in the month.
Whole milk sales totaled 1.4 billion pounds, up 1.6% from a year ago. Whole milk represented a typical 37.2% of total sales for the month. Skim milk sales, at 144 million pounds, were down 10.3% from a year ago.
The April federal order Class I base milk price was announced at $18.66 per hundredweight, up $3.19 from March, 91 cents below April 2025, but the highest Class I price since September 2025. It equates to $1.60 per gallon, down from $1.68 a year ago. The four-month Class I average stands at $16.30, down from $20.56 a year ago, and compares to $18.61 in 2024.
USDA issued January and February Chinese import data last week, and HighGround Dairy says it showed the weakest start since 2018. Whole milk powder took the biggest hit and sank to a 16-year low, says HGD, as "China's procurement strategy will likely shift as they adjust to full, free trade with New Zealand. The need to rush product in is gone. Second, domestic farmers are in a lot of pain and the government continues to promise aid to those producers."
Cheese imports were up 31%, according to HGD, with most imported from New Zealand and Australia, but sailings from Europe also rose. Imports from the U.S. were down 54%, says HGD, despite U.S. product being the cheapest in the world.
Whey shipments were down drastically. Imports from the U.S. were down 1.5%. HGD said, "The Chinese hog population is declining slowly, resulting in a steady drop in whey needs from the U.S. Hog prices in China have fallen to their lowest level since 2019, putting financial pressure on pork production companies. If the reduction in the hog herd begins to speed up, whey imports may decline more rapidly as well," HighGround warned.
Back home, while the Fed voted to keep interest rates were they are, dairy margins weakened in the first half of March from a combination of lower milk prices and steady to slightly higher feed costs. That from the latest Margin Watch (MW) from Chicago-based Commodity and Ingredient Hedging LLC.
"Most of the pressure on milk futures was due to weakness in the Class III market," the MW explained, "with Class IV Futures continuing to see strength from butter and nonfat dry milk powder. After a strong butter rally recently, butter futures sold off back below $2 per pound, although a rally in powder futures helped offset this. Butter has been supported by strong export sales despite a continued surge in output. According to USDA's Dairy Products report, January butter production of 231.5 million pounds rose 6% from 2025, although this increase was offset by the highest January butterfat exports since 1994."
"USDA Census Bureau trade data shows January 2026 butterfat exports exceeded 30.4 million pounds," the MW said, "with one-third of the volume consisting of anhydrous milkfat, which exceeds 98% butterfat. Consequently, the butterfat equivalent of January's butter and milkfat exports exceeds 14,900 MT and represents 14% of U.S. butter production in January. Cheese production during January, of just under 1.3 billion pounds, was up 4.7% from last year with a 6.5% increase noted in Italian varieties which exceeded 3.9% growth in the American category, although it should be noted that Cheddar was up 7.4% from last year."
"January cheese exports of 51,700 MT were up 11% from last year though down 4.5% from December. Mexico accounted for 30% of total cheese exports in January, but exports to our southern neighbor were the lowest since March 2025 and almost 20% below December as the U.S. dollar continues to strengthen relative to the Peso, in part resulting from the war with Iran," the MW concluded.
Last week's Livestock, Dairy and Poultry Outlook stated, "Dairy herd expansion is expected to continue into 2026, consistent with 2025 trends and supported by dairy cow numbers reported through January 2026, recent culling patterns, and expected cow retention." "Based on recent data, the number of dairy cows forecast in 2026 has been revised upward to 9.57 million, an increase of 30,000 from the previous forecast and 72,000 head more than in 2025. Milk output per cow has been revised downward to 24,520 pounds, a decrease of 65 pounds from the previous forecast, but still 129 pounds higher than in 2025."
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