The momentum of U.S. dairy exports in 2025 carried on as the calendar turned to 2026. January proved international interest in U.S. dairy products remains as year-over-year growth reached 12% in milk solids equivalent volume, with cheese and butterfat continuing to lead the way.
While still rising, export growth in monetary terms was less impressive as lower prices for U.S. cheese and butterfat in the second half of 2025 caught up with shipments, according to the U.S. Dairy Export Council’s (USDEC) latest report. The organization noted a 4% gain to $740 million during the month of January.
Big gains in January, challenges loom
Cheese and butterfat shipments posted impressive gains in January and remained the star performers of U.S. dairy product exports. In January, U.S. cheese exports moved up 11% year over year to 51,688 metric tons, and butterfat posted its ninth consecutive month of year-over-year triple-digit increases at 187% to 9,194 metric tons.
For cheese, Latin America proved its position as a reliable purchaser of U.S. dairy products. Mexico remains a cornerstone destination for U.S. cheese with product sales up 23% – or 2,960 metric tons – in January. Likewise, Central America and the Caribbean regions – like Guatemala, the Dominican Republic, Costa Rica and El Salvador – and even South America’s Chile demonstrated solid growth potential. The Central America and Caribbean regions reached 10,125 metric tons of U.S. cheese exports, up 21% year over year, while volume to South America grew 1,136 metric tons, up 53% year over year.
Butterfat performed similarly well in January. The Middle East/North Africa (MENA) region carried the weight of U.S. butterfat exports, responsible for nearly half of the 187% gain. Volume to the region rose 2,511 metric tons in January; USDEC states it’s an exponential increase over the previous year.
While momentum is evident in the U.S. dairy export scene as volume continues rising with competitive pricing and product availability for the international markets, it would be careless not to consider how market dynamics may change with the war in Iran, particularly the closure of the Strait of Hormuz. USDEC reports the water passage is a major pathway for cheese and butter shipments. At the time of this writing, its closure has immediately curtailed shipments to the MENA region and weighed on dairy demand as global inflation has increased. The effects may very well worsen as the conflict continues.
NEXT-assisted sales climb above 19 million pounds
In January, National Milk Producers Federation (NMPF) Export and Trade (NEXT) member cooperatives secured 82 contracts – the equivalent of 19.3 million pounds of dairy products – to NEXT-assisted sales in 2026. Product categories are led by cheese at 9.3 million pounds.
The products will go to 22 countries in the Asia, Oceania, MENA, South America, Central America, the Caribbean and sub-Saharan Africa regions, and will be shipped throughout the 2026 year.
Record-low exports of dairy replacements, embryos
Exports of U.S. dairy heifer replacements in January reached a record low for the month, 69% below the same month last year. At 35 animal units sold outside of domestic borders, it’s the lowest export amount in this category since September 2007 when volume only reached 21 animal units. It also marks the weakest start to a new year in two decades.
Of the small quantity exported, 24 animal units traveled north to Canada, and the remaining 11 were shipped south to Argentina.
U.S. dairy cattle embryo exports also sank in January, with volume slashed in half in a year-over-year comparison. Total sales of dairy cattle embryos were 200 in January: 189 units going to Germany and the remaining 11 to Switzerland. Once again, a new year has not started off this weak since January 2013 when U.S. dairy cattle embryo exports were reported at 183 units. Exports were last below 200 units in September 2024 when volumes tumbled to 172 units.
Dairy-quality hay exports remain steady
January exports of U.S. dairy-quality alfalfa hay reached 159,867 metric tons, down from 160,718 metric tons in December 2025 but up slightly from 155,286 metric tons during the same month last year. The primary destinations for January’s sales included China (47,885 metric tons), Saudi Arabia (35,937 metric tons) and Japan (34,495 metric tons). China and Saudi Arabia both decreased imports from the previous month at 13% and 6%, respectively, but Japan recorded a 33% increase in imports of U.S. dairy-quality hay.
Other hay sales in January were at 79,515 metric tons, down from 85,430 metric tons in December 2025 and also down from 85,737 metric tons in January 2025. The largest purchasers of U.S. other hay in January were Japan at 38,773 metric tons and South Korea at 28,290 metric tons.
Trade deficit widens from December 2025
January’s U.S. agricultural trade balance deficit was $1.75 billion, up from $1.13 billion in December 2025. Exports for the month were $15.12 billion and imports were $16.88 billion, according to the Department of Commerce/Census Bureau.
The fiscal year-to-date (Oct. 1, 2025, to Sept. 30, 2026) balance is a deficit of $3.87 billion.
