Mexico’s economy has increased for eight consecutive quarters, but a dip is possible. It is unclear how this will affect dairy demand in 2025 and beyond, but for the time being, demand has been robust and is likely to increase again next year, which should assist raise US exports.
According to Betty Berning, a Daily Dairy Report analyst, “the Mexican peso has strengthened against the US dollar for the majority of 2023, with a slight setback this fall.” The peso is now on the rise, with its value compared to the US dollar already 14% higher than a year ago. Strong demand from the US’s main dairy export market will help keep dairy goods flowing and prices stable.”
According to a recent USDA Global Agricultural Information Network (GAIN) analysis, Mexico’s milk output is predicted to rise 2% year on year to slightly more than 30.4 billion pounds in 2024. An increase of 50,000 cows over this year will bring Mexico’s milk herd to 6.7 million head. The increase in production in 2024 will be driven by increased cow numbers paired with a modest 1% increase in milk per cow.
“Lower farm input costs and rising domestic demand have pushed milk volume growth.” “Mexico processes slightly more than half of its milk, with the remainder used for drinking milk,” Berning said.
Despite expected increases in milk output, Mexico remains a milk-deficit market, according to Berning, and Mexicans are major aficionados of dairy products. Queso Fresco, a typical Mexican cheese, is popular, but some customers are looking for new variations, according to her, and although Mexico ranks fifth in worldwide butter consumption, it ranks 43rd in butter production.
Mexico’s cheese and butter production are expected to expand by 2% in 2024 compared to this year, but the country will still need to import around 27% of its cheese and 5% of its butter, according to the USDA. Cheese consumption, which has been increasing for many years, will rise by 2% this year as buying power rises and the population expands.
“Skim milk powder in Mexico is used heavily by the hotel, restaurant, and institutions sectors, and skim milk powder is also the main U.S. dairy product exported south of the border,” Berning went on to say. “And that bodes well for exports as the sectors continue to improve post-Covid.”
According to the USDA, consumption of skim milk powder is expected to increase by 11% to 498,000 MT in 2023, while Mexico’s milk driers are only expected to increase throughput by 1,000 MT to 49,000 MT next year. According to the USDA, this implies imports, which account for 90% of overall consumption, would need to climb by 13%.
