Despite getting off to a slower start than a year ago, January 2021 U.S. dairy exports were still the second highest on a volume basis and third highest on a value basis for any January in history, according to a monthly update from the U.S. Dairy Export Council (USDEC).
As in recent months, port congestion, container and labor shortages, and a host of other shipping challenges appear to be undercutting U.S. agricultural exports – including dairy. Reduced demand from Mexico also took a toll when compared to a year ago.
Here’s a look at the latest topline numbers and issues identified by the USDEC.
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Volume basis: On a milk solids equivalent basis, January 2021 exports were estimated at 161,000 metric tons (MT), down about 5% from January 2020. The USDEC attributes much of that total decline to a 10% drop in nonfat dry milk and skim milk powder exports due to ongoing U.S. port issues, even as U.S. prices remain competitive on the global market. Among other major products, cheese and lactose exports were also lower. Whey exports marked a 14th straight month of growth, and butterfat exports jumped 80%, driven primarily by sales to the Middle East-North Africa region.
- Value basis: At $505.5 million, the value of January exports was down about 9% from the same month a year earlier due to lower volumes and prices.
The main themes from January’s export data are likely to persist in the next few months, according to USDEC. Positives going forward include the potential of an economic recovery in Mexico, continued strength in butterfat and whey export volumes, and U.S. cheese prices that align more competitively with global prices.
CWT-assisted exports
As of March 8, the National Milk Producers Federation (NMPF) estimated year-to-date Cooperatives Working Together (CWT) program-assisted sales totaled about 9.8 million pounds of American-type cheeses, 7.6 million pounds of butter (82% milkfat), 2 million pounds of anhydrous milkfat, 9.1 million pounds of whole milk powder and 3.5 million pounds of cream cheese. These sales are the equivalent of 411.8 million pounds of milk on a milkfat basis.
Dairy heifer exports start year stronger
A large shipment to Pakistan helped keep U.S. exports of U.S. dairy replacement heifers above 2,000 head for a second consecutive month.
January’s sales were estimated at 2,201 head, the fourth-highest monthly total in a year. Of those, 1,750 were shipped to Pakistan. Mexico was the destination for 404 head in January, with the remaining 47 head moving north to Canada.
Looking ahead, large shipments of dairy cattle to Pakistan and Vietnam will be reflected in February’s USDA report, said Tony Clayton, Clayton Agri-Marketing Inc., Jefferson City, Missouri. New inquiries from Pakistan continue, although shipments will likely be delayed until September due to summer heat stress on cattle there. Additional inquiries are coming from Iraq, Turkey and Egypt. Clayton said exporting headwinds include more U.S. heifers being bred to beef bulls and rising oil prices, which are driving transportation costs higher.
Due to management, use of sexed semen and genomic testing that produces dairy replacement heifers in high numbers and quality, the U.S. should be the largest supplier of dairy cattle exports in the world, said Gerardo Quaassdorff, with T.K. Exports Inc., Boston, Virginia. However, structural differences among cattle exporting countries are a limiting factor.
Most importing countries follow European Union (EU) guidelines – with government-based certificates or identification documents – when purchasing cattle. In contrast, Quaassdorff said, the U.S. relies on a range of private sector systems that are primarily voluntary. That diversification, as well as declining enrollment in breed associations, makes it more difficult to identify animals and trace ancestry back three generations, a common request among buyers.
Hay exporters still challenged by shipping
While January is historically the slowest month of the year for hay exports, logistical problems drove those numbers to the lowest volumes in five years.
At 162,482 metric tons (MT), January 2021 alfalfa hay exports were the lowest monthly total since January 2016. Shipments to China were down 45,000 MT compared to December.
At 108,309 MT, January 2021 exports of other hay were up slightly from from December but about average with June-December 2020 monthly shipments.
The export numbers continue to be plagued by shipping problems, said Christy Mastin, sales representative with Eckenberg Farms, Mattawa, Washington. With new crop haying just around the corner, concerns over limited cargo space and delayed shipping schedules are mounting for U.S. marketers, and foreign customers are getting skittish, seeking reliable hay sources in other countries.
U.S. ag trade balance
Depending on what definition you use, the U.S. trade surplus was either $2.97 billion or $2.65 billion in January. The difference: The USDA, in coordination with the U.S. Department of Commerce, adopted the World Trade Organization's (WTO) internationally recognized definition of "agricultural products."
By the historical definition, January exports totaled about $15.1 billion, and imports totaled $12.1 billion. Under the WTO definition, U.S. exports totaled nearly $15.5 billion, and imports totaled about $12.8 billion.
Other trade news
Here’s a look at other issues affecting U.S. dairy and agriculture:
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USMCA dispute with Canada. The USDEC, NMPF and the International Dairy Foods Association (IDFA) issued joint comments on an ongoing U.S.-Mexico-Canada Agreement (USMCA) dispute with Canada. The three organizations have repeatedly charged Canada with failure to align its tariff rate quotas (TRQs) with USMCA commitments. The comment period for “Phase II of the comprehensive review of the allocation and administration of tariff rate quotas (TRQs) for dairy, poultry and egg products” closed on March 5.
- Harden takes over. With Tom Vilsack’s confirmation as USDA secretary, Krysta Harden becomes the new USDEC president and CEO. Assuming the top post, she pledged an aggressive approach to growing U.S. dairy exports.
