As cheese demand falters, the U.S. dairy industry is becoming more dependent on shipping larger quantities of cheese overseas. However, for U.S exporters to continue these record-large shipments, U.S. cheese prices will need to retain their competitive advantage, said Betty Berning, analyst with the Daily Dairy Report.
“The recent run of sub-$1.50 per pound Cheddar block prices, a historically low price for the past several years at the CME spot session, could be the market’s response to maintain export demand,” she said.
In July, a record volume of cheese, nearly 144 million pounds, was shipped out of the United States, and cheese exports that month equated to more than 10% of U.S. production, according to data from USDA. However, when looking at shipments based on the average number of pounds exported per day, July exports came in third behind June 2026 and April 2026, Berning noted.
“While year-over-year American cheese consumption in the United States slowed for the four-month period ending in June, Cheddar exports have been moving quickly,” Berning said. Cheddar exports of 27.4 million pounds in July also hit a new high, following June’s record-high exports. Strong international demand for U.S. Cheddar has helped U.S. cheese prices from falling even further.
“For more than a year, U.S. cheese has been priced at a sizable discount to the product offered by key global exporters, such as Europe and New Zealand, and that is a primary reason for the ongoing massive cheese exports,” Berning said. “July’s sales were likely booked in April or May, when U.S. prices were more than 50¢ per pound less than Oceania’s.”
Strong exports have helped prop up prices at a time when domestic demand has softened for natural American-style cheese due to both weakness in foodservice, restaurant, and pizza sales as well as shifting consumer preferences. Demand for Cheddar in June was the lowest for that month since 2020, the height of the restaurant shutdown during the Covid pandemic. Consumers have also been passing on processed American cheeses in favor of either high-protein dairy products, such as cottage cheese, or more upscale artisanal cheeses.
While the United States still retains a price advantage in the export market, the discount has narrowed, Berning said. New Zealand Cheddar prices plummeted in July at the Global Dairy Trade auction, and have continued falling, settling at $1.59/lb. at the September 1 auction, the lowest price since September 2020. According to the European Milk Market Observatory’s weekly readings, European Cheddar prices have dropped through the first six months of this year. However, with this summer’s serial heat waves and drought roiling Europe, Cheddar prices there have started to tick higher, with August’s average price rising to $1.75/lb.
