Over the years, cheese demand has slowly crept its way up to one of the most utilized dairy products. Per capita, the United States consumes the highest amount of cheese at 19.3 kg (about 42.5 pounds) annually. In second place, Canada consumes 14.5 kg per capita while the United Kingdom, Australia, New Zealand and Argentina trail shortly behind at 12.5-9.40 kg respectively.
While Cheese dominates consumer demand at record levels, it also dominates a big part of the milk supply. Cheese is the leading user of U.S. milkfat, at 65% of manufactured milk being utilized for cheese production. That is a huge help when we see record setting milk production month after month here in 2025 and 2026.
Earlier this month, the USDA forecasted the 2026 milk production to increase 1.5% from 2025, coming in at 235.3 billion pounds, more than 600 million pounds from a month earlier. Despite this increase in milk production, the USDA increased the projected cheese price due to recent strength in the cheese market.
The cheese price strength has been slowly creeping up from the January lows. While milk production increases, the Cold Storage Report shows available supply fading. Last week, the report showed total natural cheese stocks up 1% from the previous month but down 2% from the previous year. When you compile these facts on top of the knowledge that milk production is growing year-over-year, you can see the story building as to why cheese is the silent strength behind the dairy market. Should milk production decline, cheese will be a major factor in future price hikes.
In the short term, traders do not expect cheese to lead any major rallies. However, when looking at long term trends, with consumer demand more than doubling per capita in the last 45 years, it is hard to ignore the steady growth in the U.S. alone. Therefore, it may be the support that places a solid price floor for dairy products in the months to come.
Sarah Jungman is a commodity broker with AgMarket.Net and AgDairy, the dairy division of John Stewart & Associates Inc. (JSA). JSA is a full-service commodity brokerage firm based out of St. Joseph, MO. Sarah’s office is located in Winterset, Iowa and she may be reached at 515-272-5799 or through the website www.agmarket.net.
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