The second half of 2025 is off to a strong start with July’s U.S. dairy product exports soaring 7% (14,144 metric tons) year over year in milk solid equivalents, which was the second-largest volume moved in any month aside from August 2022. Shipments of U.S. dairy products to Latin America and Europe drove the markets even while nonfat dry milk/skim milk powder (NFDM/SMP) worsened as limited domestic availability of the product ultimately controlled export opportunities.
Cheese, butterfat boom in July export report
The monthly feats of U.S. cheese on the global market that once used to be astonishing have become seemingly expected when discussing U.S. dairy product exports as of late. July’s performance was no different as exported volumes reached 52,105 metric tons (up 29%) and contributed to year-to-date volumes 14% greater than prior-year levels. If this product category continues on this trajectory, there will likely be another annual record set in 2025, according to the U.S. Dairy Export Council (USDEC) in their monthly market update.
Insatiable demand for U.S. cheese, particularly cheddar, was evident in Central America and the Caribbean (up 49%, 2,878 metric tons), South Korea (up 35%, 1,551 metric tons) and Japan (up 105%, 2,612 metric tons) – all of which greatly contributed to July’s strong performance. Cheese exports were also spread throughout Panama, Guatemala, the Dominican Republic and Mexico, as Latin America remains a reliable trade partner for the U.S. dairy industry.
Cheese was not the only winner for the month. Butterfat shined (up 206% to 8,395 metric tons) due to an ample supply of U.S. product and a price advantage on the global marketplace. The market allowed July’s shipments to be the largest volume exported in more than a decade with notable buyers from Australia and the Middle East and North Africa (MENA). Whey exports also improved in July with both low-protein whey and high-protein whey rising 9% year over year, even despite China reducing imports of high-protein whey by 51%.
The month could not be complete without some setback, and in the case of July, NFDM/SMP was just that. The product saw a 16% decrease (down 11,103 metric tons) in exports during the month of July due to limited supply. While Mexico purchased 1% more U.S. NFDM/SMP, it was Southeast Asia’s purchase of 28% less product that greatly influenced the month’s results.
Dairy replacement exports soar, embryos remain stagnant
July rumbled with U.S. dairy replacement exports, up 174% (167 animal units from 61) from the previous month. The majority of heifer exports were shipped to North American trading partners, Mexico (80 animal units) and Canada (78 animal units). After not importing U.S. dairy replacements in the month of June, Mexico resumed purchases while exports to Canada were up 66% month over month (78 animal units from 47). Colombia also participated in purchasing U.S. dairy replacement heifers in July, purchasing nine animal units.
Year-to-date exports of U.S. dairy replacement heifers are at 823 animal units, down from 12,006 animal units at this time last year. While both Mexico and Canada have decreased imports of U.S. dairy replacement heifers in 2025 by more than half, it is the lack of purchases from Turkey, Saudi Arabia and Vietnam that really propelled exports in 2024.
Exports of U.S. dairy embryos were unchanged at 343 units shipped outside U.S. borders in July. While there were several trading partners that increased imports of U.S. dairy embryos – namely Germany (up 132 units) and Mongolia (120 units) – there were also several trading partners that did not make any purchases during the month of July.
Year-to-date sales of U.S. dairy embryos are at 2,692 units, down 22% from the same time last year. While there are several countries that have reduced their purchases of U.S. dairy embryos in 2025 and others that have modestly increased their purchases, China seems to be the influencing factor on a quantity basis. The country has imported 62% less U.S. dairy embryos to date, 294 units in 2025 compared to 778 units last year.
Alfalfa hay exports slump as other hay sales show slight improvement
Total sales of U.S. dairy-quality alfalfa hay exports were down 21% in July to 111,380 metric tons. The slump in exports were seen in reduced purchases from China (down 29%), South Korea (down 28%), United Arab Emirates (down 27%), Saudi Arabia (down 47%) and Taiwan (down 26%) on a volume basis. Of the countries that have traditionally been top trading partners for U.S. dairy-quality alfalfa hay, both Japan and Canada were the sole ones to post any gains in imports. Japan saw no change on a percentage basis month over month but did increase in quantity from 24,995 to 25,040 metric tons in July. Canada reported a 13% increase in purchases at 3,513 metric tons.
Year-to-date exports of U.S. dairy-quality alfalfa hay are at 1,015,688 metric tons compared to last year’s 1,351,480 metric tons.
Other hay sales were up 2% in July with 75,015 metric tons being shipped outside of U.S. borders. Major purchasers of the U.S. product included Japan (up 2% to 42,218 metric tons), South Korea (up 7% to 17,857 metric tons) and Canada (up 21% to 2,219 metric tons). At the same time, Taiwan reduced imports of U.S. other hay sales by 9%, from 7,772 metric tons in June to 7,072 metric tons in July.
In total, the U.S. has exported 565,364 metric tons of other hay year to date in 2025. That is down 9% from the same period a year prior (621,614 metric tons from January to July in 2024).
Trade balance deficit widens
July’s U.S. agricultural trade balance deficit was at $4.969 billion as exports slowed to $13.204 billion and imports showed gains at $18.174 billion, according to the Department of Commerce/Census Bureau’s latest report.
In a report by Bloomberg’s Gerson Freitas Jr. shared in the University of Illinois’ Farm Policy news update, Freitas Jr. stated, “The change in fortunes comes as a result of limited capacity to expand crop and livestock production, increased competition overseas and Americans’ growing appetite for imported goods. Trump’s trade wars have also played a role, pushing China – the world’s largest crop importer – to rely more heavily on Brazil for its supplies. The U.S. is also processing more of its crops domestically to produce biofuel, reducing exportable surpluses.”
The fiscal year-to-date (Oct. 1, 2024, to Sept. 30, 2025) balance is at a deficit of $38.725 billion.
National Milk Producers Federation Export and Trade (NEXT) monthly results were not available at the time of this writing. The new member-funded export assistance program began assisting sales July 3.
