Trade data released this week showed that eight months into 2020, the value and volume of U.S. dairy exports continue to grow at a double-digit pace. The U.S. Dairy Export Council (USDEC) reported that volume on a milk solids basis was up 17% compared to last August, putting year-to-date performance up 16%. Value in August grew by 11% over last year, with the year-to-date total up 14%.
“Most major product categories booked strong gains in August. U.S. suppliers shipped 190,435 tons of milk powder, cheese, whey products, lactose and butterfat — a record for the month,” USDEC said. “The August increase capped a full year — 12 straight months — of year-over-year increases in aggregate U.S. dairy export volume.”
In August, core categories — nonfat dry milk (NDM), skim milk powder (SMP), cheese and whey products — propelled a strong month overall and extended year-to-date gains. Each was fueled by different factors, USDEC noted.
Total U.S. NDM/SMP exports rose 35% to 68,798 tons, driven primarily from a doubling of shipments to Southeast Asia with the aid of competitive pricing and a committed U.S. presence in the region. Total U.S. NDM/SMP exports were 17,714 tons higher; shipments to the six primary markets in Southeast Asia grew by 14,288 tons.
Even though NDM/SMP export volumes have decelerated over the past three months, the U.S. Department of Agriculture's latest "Dairy Products" report revealed a decline in August inventories as well as levels that have remained below the comparable 2019 periods after the March and April surge, which USDEC said "suggests the market remains in balance despite weakness in Mexican demand.”
USDEC said cheese exports enjoyed a surprisingly strong month. Exports grew 17% to 31,009 tons, with impressive growth across the core U.S. markets. U.S. cheese exports to Mexico rebounded in August, increasing 29% to 8,807 tons, while sales soared to South Korea (up 88%), Japan (up 49%) and Australia (up 53%).
U.S. cheese export prices were well below May and June U.S. domestic prices, suggesting that U.S. exporters accepted lower margins to maintain international relationships, USDEC said.
However, other markets, where tourism accounts for larger shares of gross domestic product and cheese consumption – such as Central America, the Caribbean and Southeast Asia -- continue to lag in cheese buying.
USDEC reported that August whey shipments saw double-digit gains in all categories due to strength that was almost entirely due to China and its continuing attempts to rebuild its hog herd. Total U.S. whey exports grew 29% in August, an increase of 11,281 tons, while U.S. shipments to China jumped 318% for the month, or 17,212 tons.
USDEC said the significant month-to-month surge could be signaling an increase in U.S. whey market share thanks, in part, to the Phase One trade agreement between the U.S. and China.
“U.S. whey export growth to China should be further supported by China’s move last month to extend a retaliatory tariff exemption on U.S. permeate for animal feed,” USDEC said.
Further, China's whey import gain more than made up for declines to other regions, like Southeast Asia (down 14%) and Mexico (down 60%).
In other products, U.S. butterfat exports rose 4%, with gains to Canada, Saudi Arabia and Japan. Lactose volume fell 8% to 29,168 tons.
U.S. milk protein concentrate exports rose 37%, with Canada as the top destination. USDEC said the increase was a hopeful sign that changes to Canada’s Class 7 pricing scheme mandated by the U.S.-Mexico-Canada Agreement might be effective in helping U.S. suppliers re-establish business.