U.S. cheese prices saw incredible volatility in 2024, with Cheddar prices ranging from below $1.40 per pound to more than $2.60 per pound. Strong global demand, new capacity coming online, wavering domestic demand, and tighter stocks all contributed to last year’s volatility, and that volatility is likely to continue this year. As an uncertain supply situation combines with politics, new capacity and consumer reaction to prices could produce headwinds for what remains an undeniably popular product in the U.S. and abroad.

One unique driver we saw was just how weak domestic cheese demand was last year. Total U.S. cheese disappearance for the year was up slightly at 0.8%, but that was due to strong export growth, not consumption. Total domestic cheese consumption for the year actually fell 0.4%. Consumers are still facing high prices, despite eased inflation, and that’s taking a bite out of demand.

Meanwhile, food and beverage prices are 15% higher than they were three years ago, before the runup in inflation. Cheese is no different, with prices up nearly 10% over the same period. Food service has seen the biggest pullback in cheese demand. Prices at food service establishments are up significantly, and those high prices are pushing consumers to find better deals elsewhere. According to YouGov, fast food is seen by consumers today as having the lowest return or value for money spent on food away from home. That lower value proposition is pushing consumers to buy more cheese at retail (up 2.3% last year).

Unfortunately for cheese producers, a restaurant meal contains more cheese in it than one cooked at home, which means less domestic cheese consumption despite higher retail sales.

The good news for U.S. dairy farmers and processors is that, while domestic cheese consumption lagged last year, exports grew significantly — up 17% year-over-year in 2024. Incredible demand out of Mexico drove the growth, with U.S. cheese exports to the country up 29%. Nearly every top U.S. cheese export destination saw volumes rise last year as well.

Looking at 2025, we see a continuation of 2024’s trends. U.S. cheese exports are expected to continue growing, barring any political disruption. But domestic demand also shows little sign of any significant rebound in food service, which, even with stronger retail demand, will limit growth in domestic consumption.

Thus, with a mixed demand outlook, the biggest wildcard for cheese in the year ahead will likely be supply, given the juxtaposition of new cheese processing capacity with a relatively tight milk supply. Given the uncertainty in the marketplace, volatility in cheese prices is likely the safest prediction.