Guest Columns

Perspective:
Dairy Markets

A bigger world for U.S. cheese

Melissa Bischoff

Melissa Bischoff is director of dairy market intelligence, EA Risk, at Ever.Ag*, a brokerage firm that specializes in dairy product price risk management. She is a guest columnist for this week’s issue of Cheese Market News®.

Historically, the U.S. dairy industry has been heavily focused on domestic consumption. There are good reasons for that. The vast majority of U.S. dairy products are consumed here at home, and cheese has been no exception.

But I would argue that we are in the middle of a transition in how the industry needs to think about the cheese market.

Analysts have long described exports as a clearinghouse for excess supplies, somewhere product could go when domestic production outpaced demand. That may have accurately described the market at one time, but I don’t think it captures where we are today. Exports are becoming less of a relief valve and more of a structural component of U.S. cheese demand.

Why is this the case? Start with the domestic consumer.

U.S. per capita cheese consumption has steadily increased through much of the 21st century. From 2000 through 2022, per capita consumption grew at an average annual rate of 1.4%. But that growth has slowed dramatically. Between 2023 and 2025, the average annual increase fell to just 0.11%, and consumption is tracking only about 0.15% higher over the last 12 months.

Population growth is slowing as well. U.S. population increased at an average annual rate of 0.78% from 2006 to 2019. That slipped to 0.57% five years after that and has slowed to just 0.29% so far in 2026.

Put those two trends together, and the challenge becomes clearer. Per capita cheese consumption is relatively flat at a time when there are fewer new consumers being added to the domestic market. That makes meaningful growth in total U.S. cheese intake more difficult to achieve.

Shifting dietary habits add another headwind. Consumers are paying greater attention to protein, portion sizes and overall calorie intake, while growing adoption of GLP-1 medications could further reshape food consumption patterns. Studies have found GLP-1 users spend 5.3% less on groceries and 8% less at restaurants, while McKinsey reports cheese purchases are down 7.2% among users. Combine those shifts with continued financial pressure on consumers, and the backdrop for retail and foodservice demand looks challenging.

There are bright spots, of course. Cottage cheese continues to fly off the shelf. But broadly, it is difficult to identify a major dietary trend today that points to an acceleration in overall cheese consumption.

Meanwhile, the supply side of the equation looks very different. From 2006 to 2019, U.S. cheese production grew at an average annual rate of 2.6%. Growth slowed only modestly to 2.0% between 2020 and 2025. In 2026, production is running a whopping 5.2% above year-ago levels.

That divergence matters. Cheese capacity tends to come online in big steps, while demand usually builds much more gradually. With significant new cheesemaking capacity added over the past two years, some of today’s imbalance is likely the natural result of a step higher in production running into a much slower-moving demand curve.

The question is whether domestic demand eventually catches up. With much of the recent wave of large cheese capacity additions now online and fewer projects immediately on the horizon, there may be some room for domestic demand to close the gap. But I’m not convinced it will catch up entirely. Fortunately, it may not need to do as much heavy lifting.

Cheese exports aren’t new. From 2006 through 2019, exports represented an average of about 4.6% of U.S. cheese production, although the percentage varied significantly from less than 2% to as high as 8.2%. From 2020 to 2025, that average share moved steadily higher to 7.2%. Today, amid record export volumes, exports represent roughly 10.8% of U.S. cheese production.

We’ve seen strong export years before, but 2026 looks different. In previous record-setting years, strong exports coincided with higher cheese prices. CME block Cheddar averaged $2.11 in 2014, $2.07 in 2022 and $1.79 in 2024. By comparison, record export volumes this year have come alongside much lower prices, with blocks averaging just $1.52 over the most recent 12 months.

That distinction matters. Strong exports aren’t simply accompanying a tight U.S. market. They’re increasingly necessary to balance a market producing more cheese than the domestic consumer is absorbing.

That suggests something more structural is taking place. The U.S. cheese industry is increasingly producing for a global marketplace. And there are plenty of reasons it can. U.S. dairy farmers are exceptionally good at making milk. The country has a large, high-quality milk supply available year-round, less seasonality than many competing regions, and an industry with the infrastructure and ability to continue growing. Why shouldn’t more of that milk ultimately land on dinner tables around the world?

But becoming a consistent global supplier comes with strings attached. International buyers need reliable product availability, but they also need globally competitive prices. If the U.S. wants to maintain and grow its share of international cheese trade, domestic prices cannot operate independently from Europe, New Zealand and other major suppliers. When U.S. prices move too far above competing markets, export demand becomes more difficult to sustain.

That creates a meaningful shift in the U.S. cheese outlook. For years, we have largely looked to the domestic consumer to tell us whether cheese supplies were adequate, tight or burdensome. Increasingly, that answer may come from outside our borders.

Domestic consumption still matters enormously. And with the largest wave of new capacity now behind us, slower growth in cheese production could give domestic demand an opportunity to narrow some of the recent gap. But the longer-term math hasn’t necessarily changed. If production continues to grow faster than the American consumer’s appetite for cheese, exports will have to absorb an increasingly important share of that growth. And as they do, global milk supplies, international cheese prices, currency values and overseas demand will carry more weight in determining where U.S. cheese prices need to trade.

That may also mean more volatility. A cheese market increasingly dependent on international demand is no longer responding only to what’s happening inside the U.S. A change in milk production halfway around the world, a currency move or a shift in international buying could carry more weight here at home than it has historically.

The consumer isn’t just here anymore. The consumer is global, and increasingly, the U.S. cheese market will have to price like it.

CMN

The views expressed by CMN’s guest columnists are their own opinions and do not necessarily reflect those of Cheese Market News®.

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