As we venture further into 2025, the dairy industry faces significant challenges and opportunities. Phil Plourd, the President of Ever.Ag Insights, highlights three pivotal stories shaping the market landscape this year: exports, milk production growth and consumer demand.
The Role of Exports in Price Determination
Exports have a substantial impact on dairy prices, both in the near and medium terms. Plourd emphasizes the current flow of cheese being shipped overseas, much of which was booked months ago.
“That’s nice,” he says. “That’s supporting things.”
However, Plourd expresses concern about competitiveness moving into the second quarter. With European prices falling, the U.S. may struggle to secure the next wave of exports at the current price point of $1.80. This could impact the stability of the market as American producers may need to adjust to stay competitive.
Challenges in Growing Milk Production
Another major factor in the dairy market is the balance between additional milk capacity and the ability to grow milk production. Plourd identifies this as a central theme going forward. While nationwide the conditions appear favorable for growth, regional challenges such as the Highly Pathogenic Avian Influenza (HPAI) in California complicate the situation.
“The rest of the country is ready to grow, and the numbers have been pretty good,” Plourd notes. This positive outlook is, however, tempered by the slowed growth in California due to the HPAI situation.
Neutral Consumer Demand with Lingering Inflation Effects
Consumer demand remains a mixed bag according to Plourd. He describes the current demand landscape as “neutral,” seeing neither strong tailwinds nor significant headwinds. Nonetheless, he acknowledges the persistent impact of inflation on consumer behavior.
“Consumer ‘unavoidable’ like automobile and home insurance are still increasing at a very healthy clip,” Plourd observes. This increase in essential expenses leaves many households economically challenged, which poses particular difficulties for the restaurant sector. The demand there remains inconsistent and choppy, further complicating the market.
Overall, navigating the complexities of the dairy market in 2025 requires close attention to these three factors. Stakeholders must stay agile to adapt to the shifts in export dynamics, milk production capabilities, and consumer demand trends. While challenges exist, there is still a hint at the possibilities for growth and adaptation in the evolving market.
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