US dairy to continue growth - CoBank
Exports to remain the wildcard
19 January 2024
2 minute read
By: The upside potential dairy demand faces some question marks moving into the new year, according to a CoBank economic forecast for the year ahead.
Dairy’s product sales should grow, led by natural cheese, butter and yogurt. However, growth will slow, as consumers continue to feel economic pressure. The dairy aisle continues to be the largest sales category in US grocery stores, according to the report. Sales record over $78 billion annually, based on Circana data.
In 2023, US dairy exports fell to 16.5%. This is a decline after record sales were posted in both 2021 and 2022. In those years, US exports represented 18 and 19% of total production respectively.
"Ultimately the wild card is international demand as the world’s growing middle class craves more high-quality proteins," wrote the report's author, Terry Geiger. "While countries with growing middle-class economies could step up dairy purchases, a strong US dollar also could dampen sales. Additionally, China – the world’s largest dairy product importer accounting for roughly 20% of all purchases – remains mired in an economic slump. In 2021, China’s gross domestic product had grown to 75% of the US total. By the third quarter of 2023, China’s GDP had slipped back to 64% of the US total, the same as 2017."
Lower input costs and improved productivity should spur strength in the market. The US, according to the report, is poised to deliver dairy order at a time when other major exporters are showing signs of static milk production growth.
