U.S. dairy exports are on track for a record year despite flat sales on both a volume and value basis in October due to China’s retaliatory tariffs, Alan Levitt and Marc Beck with the U.S. Dairy Export Council (USDEC) reported.

According to their report, shipments of milk powder, whey, lactose, cheese and butterfat to China were down 47% in October, while U.S. exports elsewhere were up 14%, with large gains in sales to Southeast Asia and Mexico.

On a total milk solids basis, U.S. exports were equivalent to 15.3% of U.S. milk production in October, bringing the year-to-date percentage to 16.3%. According to Levitt and Beck, the calendar year record was in 2013 at 15.4%.

They said since China put additional tariffs in place four months ago, U.S. whey exports to China were down 36% (down 6,909 tons per month) compared with a year ago. Skim milk powder (SMP) sales were down 54% (1,333 tons per month), whole milk powder (WMP) sales were down 97% (1,288 tons/month) and cheese exports were down 56% (752 tons per month). On a value basis, total dairy exports to China were down 36% in the July-to-October period.

Despite the lower results to China, Levitt and Beck reported that exports to Mexico and Southeast Asia in October were up 25% and 29%, respectively, on a value basis. This was mostly due to the strength of improved sales of nonfat dry milk (NDM) and SMP, they explained.

U.S. exports of NDM/SMP totaled 60,672 tons in October, a 19% increase compared to a year ago. The 2018 total through 10 months – 617,096 tons – has already established a new annual high, with two months to go. Shipments to Mexico, which were up 37% (32,734 tons) remained heavy in October, while sales to Southeast Asia (a six-month high of 20,401 tons, mostly to Indonesia, the Philippines and Malaysia) were up 39%.

In contrast, Levitt and Beck reported that sales to China, Peru, Pakistan, Japan and the Middle East/North Africa (MENA) region were negligible, down more than 5,800 tons among them compared with a year ago.

According to the report, U.S. suppliers also moved greater volumes of WMP to Southeast Asia. Total September exports were up 124% to 4,227 tons, and nearly half went to Vietnam. In contrast, sales to China were just 38 tons, a fraction of what was shipped last year, USDEC noted. Still, U.S. WMP exports have doubled this year.

Whey exports in October were just 40,765 tons, down 19% from a year ago. Additionally, all sub-categories of whey were markedly lower, USDEC said. Exports to China in October were down 51% to just 10,167 tons, the worst month since November 2015. For the third straight month, Levitt and Beck said most of the decline came from lower sales of modified whey (permeate).

“Once again, suppliers diverted whey sales to Southeast Asia, where volumes were up 19%, including record sales of modified whey (permeate),” USDEC reported, adding that sales to Japan and South Korea were also higher.

Cheese exports of 26,931 tons were on par with a year ago in October, monthly data showed. In fact, USDEC reported that, despite retaliatory tariffs, cheese shipments to Mexico improved, rising 31% against a weak October last year. U.S. suppliers also saw slower sales to China (down 59%), Japan (down 26%) and Australia (down 25%). The most notable gains, Levitt and Beck said, were posted in sales to the MENA region (up 36%) and Southeast Asia (up 28%).

Lactose exports totaled 29,070 tons in October, the lowest figure in 17 months (daily-average basis), according to USDEC. Shipments to China were down 9% following implementation of new tariffs in late September, while sales to Southeast Asia were down 18% and exports to New Zealand were at an eight-year low. Sales to Japan, in contrast, were up 39%, USDEC said.

Butterfat exports totaled 5,603 tons, up 75%, which Levitt and Beck said is the most in more than four years. Gains were led by record sales to Mexico of 3,156 tons.

Exports of milk protein concentrate continued to track higher in October, monthly numbers showed. Shipments of 3,362 tons were more than double year-ago levels. Sales to Mexico were the most in nearly a decade, and volumes to Canada and the MENA region were higher as well.

Shipments of fluid milk and cream were up 18%, with sales to Canada and Mexico the highest of the year.

According to USDEC, exports of food preps (blends) continue to lag behind year-ago levels. September shipments were 6,318 tons, the highest figure of the year, but they were still down 19% from a year ago.

Suppliers shipped 176,948 tons of milk powders, cheese, butterfat, whey products and lactose in October, up 2% from October 2017. Total U.S. exports were worth $459.8 million, 1% below a year ago. In the first 10 months of 2018, dairy exports totaled $4.71 billion, 4% more than the same period in 2017, while overall volume was up 15%.

On a total milk solids basis, U.S. exports were equivalent to 15.3% of U.S. milk production in October, bringing the year-to-date percentage to 16.3%.