Dairy Exporters Shift Focus to Cheese and Whey for Growth
In a strategic shift, major dairy exporters are increasingly focusing on the production of cheese and whey products rather than traditional milk powder. This move aims to capitalize on the growing global demand for higher-value dairy ingredients.
New Zealand continues to rely heavily on China, which absorbs between 36% and 40% of its dairy exports. Meanwhile, in the European Union, despite a projected 0.7% reduction in the number of cows, productivity gains are expected to keep production stable with a slight increase of 0.1% by 2025. The EU is directing more milk towards cheese production and expanding whey offerings for premium protein markets, although export outlooks remain cautious due to logistical costs and lower Chinese demand.
Uruguay maintains its growth trajectory with a focus on whole milk powder and butter, which saw a 3% increase in export revenue by May 2026 compared to the previous year, despite a decline in cheese shipments. Algeria and Brazil remain key markets for Uruguayan products.
In the United States, dairy production expansion supports a robust export performance. Cheese exports grew by 25.1% by April 2026, reaching nearly 238,000 tonnes, with South Korea being a significant driver of this growth. Skimmed milk powder exports rose moderately by 6.2% over the year, while commodity whey exports increased, although premium whey proteins like WPC80+ saw reduced volumes due to domestic demand prioritization.
Argentina is also increasing its stake in the international dairy market, with production expected to grow by 4% in 2026, nearing 12 million tonnes. As domestic consumption slowly rebounds, a larger portion is being exported, particularly cheese and whole milk powder, with Brazil and Algeria as primary destinations.
Brazil, on the other hand, experienced slower production growth in 2026 after a strong expansion in 2025. Despite this, Brazil remains a significant importer of milk powder, constrained by a tighter cattle cycle and lower cow slaughter rates amid high external demand.
China's domestic milk supply increase and weaker consumption have reduced its need for imported whole and skimmed milk powder. However, imports of cheese, butter, and whey remain steady, driven by demand in foodservice, baking, and premium product sectors where local production does not fully meet quality or volume needs. This shift reflects a broader trend towards less reliance on traditional dairy commodities and a focus on higher-value products in international markets.
