U.S. Cheddar Export Compensates for Decreased Domestic Demand
The U.S. dairy industry is increasingly reliant on foreign markets as exports absorb cheddar volumes not met by domestic demand. According to Betty Berning from the Daily Dairy Report, significant U.S. cheese exports have helped prevent further declines in spot prices on the Chicago Mercantile Exchange.
Recently, cheddar prices fell below $1.50 per pound, or $3.31 per kilogram, marking a multi-year low for the Chicago Mercantile Exchange. Analysts consider this level a necessary market mechanism to keep U.S. suppliers competitive in key export destinations.
According to data from the United States Department of Agriculture, nearly 144 million pounds of cheese were exported from the U.S. in July, accounting for more than 10% of monthly domestic production. Cheddar accounted for 27.4 million pounds, approximately 12.4 million kilograms, setting a record monthly volume that exceeded June's figure. However, average daily shipments in July slightly lagged behind levels from June and April 2026.
Exports supported demand as retail and food service consumption declined. In June, commercial demand for natural cheddar reached its lowest level for that month since 2020. Reduced patronage of restaurants, pizzerias, and other food service establishments decreased purchase volumes.
U.S. suppliers maintained an advantage due to lower prices compared to competitors from Europe and Oceania. In the spring, forward contracts were made when U.S. cheddar was over 50 cents per pound, or $1.10 per kilogram, cheaper than New Zealand's. Buyers from Latin America, Asia, and the Middle East secured supplies under these conditions, channeling U.S. stocks into export pathways.
Within the United States, consumer demand also shifted. Customers increasingly opted for high-protein products, such as cottage cheese, or specialized artisanal cheeses instead of processed and traditional American cheeses. This reduced supermarket sales.
The gap between U.S. cheese prices and those of competitors narrowed. In August, the average price of European cheddar rose to $1.75 per pound, or $3.86 per kilogram, due to a hot and dry summer in Europe. In early September, New Zealand cheddar dropped to $1.59 per pound, or $3.50 per kilogram, at the Global Dairy Trade auction—the lowest level in six years. As discounts on Oceania products decrease, U.S. cheddar prices on the spot market at the Chicago Mercantile Exchange must remain orderly to sustain U.S. market share and processing capacity utilization.
