Decreased sales to China offset have increased cheese exports and record whey-lactose shipments to Southeast Asia.
Lost sales to China due to retaliatory tariffs and African swine fever, plus strong competition elsewhere from European and New Zealand suppliers, resulted in a decreased U.S. export volume in the first half of 2019. Shipments of milk powders, cheese, butterfat, whey products and lactose were 1 million tons, a decrease of 14 percent from the previous year’s record pace. Exports of those major products to China decreased 54 percent, while sales to other markets increased 5 percent.
Overall value of U.S. dairy exports reached $2.95 billion in the first half, an increase for the third-straight year. Suppliers saw notable gains in sales value to Mexico, Southeast Asia, South Korea, Canada and South America, offsetting a large decline in sales to China.
Bright spots for the first half of the year included increased cheese exports, record whey and lactose sales to Southeast Asia, and record fluid-milk-cream shipments.
Cheese exports in the first half of 2019 were 193,169 tons, an increase of 4 percent from a year ago. It’s the most since 2014.
U.S. suppliers posted record volumes.
- South Korea increased 26 percent.
- Southeast Asia increased 16 percent.
- Central America increased 28 percent.
- The Middle East/North Africa region increased 16 percent.
Those offset declines in shipments to Mexico – a decrease of 15 percent – and China – a decrease of 46 percent.
Nonfat-dry-milk-powder and skim-milk-powder exports failed to match the previous year’s record pace. First-half volume was 327,755 tons, a decrease of 15 percent. Volume was less in all major markets, including in Mexico with a decrease of 5 percent and Southeast Asia with a decrease of 10 percent. The United States lost share to European suppliers when the European Union’s sizable public-intervention stocks – which had hung over the market for the past four years – made their way to private hands that sold products at a discounted price. U.S. suppliers also faced competition from New Zealand exporters, who sought to clear production from a record flush in 2018-2019.
The U.S. Dairy Export Council has adjusted official U.S. Bureau of Census trade data for nonfat-dry-milk and skim-milk powder as well as whole-milk powder since June 2016 to account for shipments believed to have been misclassified.
Whey exports overall were 225,627 tons in the first six months of 2019, a decrease of 25 percent. That’s the worst figure since 2011 – and attributable almost entirely to reduced demand from China. In addition to tariffs that have made U.S. whey less competitive, African swine fever has led to massive hog culling. That has reduced the need for feed-use dry whey and whey permeate. Total whey exports to China decreased 58 percent in the first half, a loss of more than 12,000 tons per month. Suppliers partially compensated with increased whey sales to Southeast Asia with an increase of 5 percent, a new record volume, and to Mexico with an increase of 12 percent.
Dry-whey exports in the first half were just 81,994 tons, a decrease of 33 percent and the worst since 2004. Most of the decline came from China, but suppliers also saw sales reductions from Japan at a decrease of 50 percent and Southeast Asia at a decrease of 15 percent.
Whey-protein-concentrate exports have increased as the year has progressed, but total volumes still trail the previous year by a third. China matched virtually all the shortfall, while other markets mostly matched or exceeded the previous year, including record sales to Mexico at an increase of 14 percent.
Modified-whey or permeate shipments were at the worst first-half volume since 2012, decreasing 10 percent from the 2018 pace. Suppliers were able to offset some of the lost sales to China with record exports to New Zealand at an increase of 154 percent and to Southeast Asia at an increase of 60 percent.
Whey-protein-isolate volumes increased 9 percent in the first half, coming in just shy of the record 2015 pace. Volumes to Southeast Asia, which increased by 38 percent, and to South Korea, which increased by 43 percent, were the most ever. Sales to Canada, the EU and even China also were better than year-ago levels.
Lactose exports were 186,977 tons in the first half, a decrease of 11 percent from the previous year’s record pace, but still the second-most ever.
- Sales to China decreased 33 percent.
- Volumes to Japan decreased 13 percent.
- Volumes to New Zealand decreased 9 percent.
- Exports to Southeast Asia increased 9 percent, the most ever.
Fluid milk-cream exports increased 16 percent.
- Record volumes went to Taiwan, largest customer of the United States – an increase of 32 percent.
- Mexico volumes increased 8 percent.
- Sales to Canada increased 46 percent.
Milk-protein-concentrate was better for the third-straight year by 17 percent year-to-date. The majority of the gains came from an almost-four-fold increase in sales to Canada.
Butterfat and whole-milk-powder exports each decreased more than 30 percent in the first half. Strong domestic use has made less butter available for export. Suppliers lost a key whole-milk-powder market in China with a decrease of 94 percent.
Food-prep or blends sales decreased 19 percent in the first half, the worst volume in 17 years. Most U.S. sales go to Canada, where volume decreased 10 percent.
On a total-milk-solids basis, U.S. exports were equivalent to 14.1 percent of U.S. milk-solids production in the first half of 2019. During the previous five years, exports have averaged 14.7 percent of production.
Visit www.usdec.org for more information.