The dairy product export scene was both good and bad in May. Despite U.S. cheese exports setting yet another record for volume shipped in a single month, and others like butterfat, milk powder and high-protein whey posting year-over-year gains, shipments of low-protein whey and lactose to China plunged and caused a 2% decline in total year-over-year milk solids equivalent (MSE) exports. Here’s Progressive Dairy’s 30,000-foot look at dairy-related export categories.
Shipments to China dragged down other export bright spots
As was a similar case in April, dairy product exports to China – primarily low-protein whey in the form of whey permeate and lactose – weighed heavily on the dairy product export market in May despite other categories continuing to outperform previous months. As a result, total year-over-year MSE exports fell 2% and total year-to-date MSE volume was down 1.6%. However, U.S. dairy product export value rose 13% to $803 million in May, maintaining the target year-to-date growth of 13% to $3.873 billion as reported in the U.S. Dairy Export Council’s (USDEC) monthly market update.
Ongoing trade tensions with China have resulted in limited demand for U.S. dairy products, resulting in May exports to the country at 10,472 metric tons, becoming the weakest month since July 2010. It was a stark 68% decline (down 22,225 metric tons) compared to May 2024; notably, whey exports fell 70% (down 15,649 metric tons). For reference, 16% of all U.S. dairy product exports – 43% of low-protein whey products – went to China in 2024. In May 2025, the U.S. shipped 25% less low-protein whey (down 11,873 metric tons) compared to the same month last year.
While the ongoing trade tensions with China have certainly impacted U.S. dairy product exports in 2025, other dairy products and partnerships continue to shine.
In May, U.S. cheese exports surpassed 50,000 metric tons for the first time as volume rose 7% with U.S. prices helping drive demand. Most major markets saw considerable gains, including Japan (up 24%, 1,148 metric tons), South Korea (up 20%, 1,102 metric tons), Central America (up 23%, 1,054 metric tons) and South America (up 47%, 1,020 metric tons) to name a few. Mexico, as the single largest destination for U.S. dairy exports, reported a year-over-year 12% decline (2,207 metric tons) in cheese exports for May. It’s important to remember that May 2024 cheese exports to Mexico was one of the strongest months on record, and May 2025 exports to the region were still the sixth-highest of any month.
Other dairy product exports saw respectable gains in the month. Year-over-year U.S. nonfat dry milk/skim milk powder (NFDM/SMP) volume rose 2% (up 1,059 metric tons) to 61,953 metric tons, and year-over-year U.S. butterfat exports rose an astonishing 151% (up 4,506 metric tons) to 7,486 metric tons.
In the recently passed One Big Beautiful Bill, the new Supplemental Agricultural Trade Promotion Program will be established and provide an annual allocation of $285 million in mandatory funding. This funding complements the already established USDA Market Access Program and Foreign Market Development programs, which are annually funded at about $235 million combined.
“We are grateful for Congress increasing its investment in trade promotion funding, which is essential to expanding opportunities for U.S. dairy exports in competitive global markets,” stated Krysta Harden, USDEC president and CEO, in a press release. “We look forward to working with USDA and our members to build on recent successes and ensure a more level playing field for U.S. dairy.”
Dairy heifer, embryo exports continue upward climb
U.S. dairy heifer replacement exports showed strength once again in May. For the month, exports rose 49% month over month to a total of 136 animals exported in May as Mexico, Canada, Pakistan and Guinea sought U.S. dairy heifer replacements. After a two-month hiatus in the market, Mexico rejoined to carry sales with 66 animal units and Canada rallied behind with 40 animal units, despite a 48% decline from April. Although the month showed a strong performance, it was down 54% compared to the same month in 2024, likely the result of the New World screwworm threat which paused cattle movement across borders.
Year-to-date exports of U.S. dairy heifer replacements in May was 595 animal units.
In the embryo market, U.S. dairy embryos were up 49% in May from April with a total of 387 units being shipped to Japan, Germany, Australia, Switzerland and the United Kingdom. Last year’s sales for May were 737 units. While Germany has been a consistent purchaser of U.S. dairy embryos in 2025, May’s sales to the country were down 18% from 153 units the month prior to May’s 125 units. On the contrary, Japan reentered the marketplace and purchased 190 units after not receiving imports since February. The remaining U.S. dairy embryo exports went to Australia (56 units), Switzerland (11 units) and the United Kingdom (five units).
U.S. dairy embryo sales totaled 2,006 units for the year as of May.
Dairy-quality alfalfa, hay exports fall in May
Total sales of U.S. dairy-quality alfalfa hay exports fell again in May, but marginally compared to the month prior. The month saw a 9% decrease in exports with 128,303 metric tons shipped outside of U.S. borders as major purchasers withdrew and others bought in. This same month last year saw exports at 198,511 metric tons. In May 2025, Saudi Arabia purchased 37,662 metric tons (up 64%) and the United Arab Emirates purchased 7,178 metric tons (up 103%) as imports to China and South Korea fell 52% and 15% to 24,190 metric tons and 18,201 metric tons, respectively.
Year-to-date exports of U.S. dairy-quality alfalfa hay sat at 792,985 metric tons as of May.
Likewise, U.S. sales of other hay were down 9% in May compared to the month prior. In total, 74,409 metric tons were exported with major purchasers including Japan, South Korea, Taiwan, Canada and the United Arab Emirates on a metric tons basis. However, of these purchasers, Taiwan was the only one to increase other U.S. hay imports in May to 9,470 metric tons (up 19%). The remaining trade partners decreased their purchases, Japan down 2% to 44,017 metric tons, South Korea down 25% to 16,157 metric tons, Canada down 11% to 1,674 metric tons and the United Arab Emirates down 35% to 1,269 metric tons.
Last year, May sales of U.S. other hay was at 96,318 metric tons. Year-to-date exports were at 416,654 metric tons in May 2025.
Trade balance deficit climbs
May’s U.S. agricultural trade balance deficit rose again as the value of exports was down, as was the value of imports, but to a lesser degree. The Department of Commerce/Census Bureau estimated May U.S. agricultural trade exports at $13.753 billion and imports at $18.636 billion for a trade deficit balance of $4.882 billion; $303 million more than in April.
In June, following the USDA’s release of April’s export scene, experts projected May’s forecasts as the largest agricultural trade deficit in U.S. history. While dairy and livestock product exports are projected to continue to outpace imports in 2025, horticulture product imports are projected to be significantly more than exports, according to an analysis by the American Farm Bureau Federation (AFBF) and USDA Foreign Agricultural Service.
“Strong U.S. demand for high-value, consumer-ready products, many of which are not widely produced domestically, has driven up import values, while a large share of U.S. exports remain lower-value bulk commodities, contributing to the growing trade imbalance. … The latest USDA report makes it clear that closing the trade gap will require continued efforts to build reliable, science-based access to global markets for the long term,” wrote Faith Parum in AFBF’s latest Market Intel report.
The fiscal year to date (Oct. 1, 2024, to Sept. 30, 2025) balance is a deficit of $29.622 billion.
