Here’s a look at the topline numbers:
- Volume basis: U.S. dairy export volume (milk solids basis) grew 14% in October (versus the previous year). It was a record for October and the third time this year that U.S. suppliers topped the 200,000 metric tons in a single month. The U.S. remains on pace to set a new annual record for export volume.
The big rebound in October 2020 whey sales (up 64%) to China followed last year’s retaliatory tariffs and reduced demand due to African swine fever. Shipments of higher-valued whey to Japan, South Korea and Southeast Asia are also a growth market.
In addition to whey, strong sales of skim milk powder (SMP) to Southeast Asia were enough to offset reduced demand across categories in Mexico and slow U.S. cheese sales in most other regions due to record-high U.S. cheese prices.
- Value basis: At $563.3 million, the value of October exports were up 6.6% from a year earlier. Through the first 10 months of 2020, dairy exports were valued $5.54 billion, up about 12% from the same period in 2019.
CWT-assisted exports
As of Dec. 7, the National Milk Producers Federation (NMPF) estimates Cooperatives Working Together (CWT) program-assisted sales for year-to-date 2020 totaled 33.8 million pounds of American-type cheeses, 14.1 million pounds of butter, 48.6 million pounds of whole milk powder, 2.8 million pounds of anhydrous milkfat and 6.6 million pounds of cream cheese. The sales are the equivalent of about 1.1 billion pounds of milk on a milkfat basis.
U.S. ag export outlook: Dairy projections hold steady
Increased volumes and values of corn and soybean exports dramatically improved the outlook for U.S. agricultural trade is fiscal year 2021 (FY 2021), according to the USDA’s quarterly Outlook for U.S. Agricultural Trade report, released in late November. The outlook for FY 2021 dairy exports at $6.6 billion is up about $137 million from FY 2020. If realized, it would be the second-highest dairy export total on record and highest since the $7.4 billion in dairy product exports in 2014.
Dairy heifer exporters ending difficult year
Exporters of livestock are coming to the end of a challenging year made more difficult by the COVID-19 pandemic, which limits travel of both buyers and sellers. Doing business remotely is a barrier in an industry where face-to-face relationships are critical, and live animal evaluations are important.
October exports were estimated at just 532 head, with 387 head moving to Mexico and 145 head to Canada. For the year, those two countries have been the destination for just over 2,000 head each.
Exporters confirmed last month’s report of 2,050 head of replacement dairy heifers shipped to the Republic of Uzbekistan were actually Angus, Red Angus and Herefords.
The good news, according to Gerardo Quaassdorff, with T.K. Exports Inc., Boston, Virginia, is that the U.S. is becoming the largest supplier of dairy heifers, and he expects sales to end the year stronger.
However, genetic demands from buyers often require a three-generation pedigree, even if genomic tests are available. While heifer sires often meet that depth of pedigree, the dams do not.
Other challenges include limited availability of shipping vessels and cargo planes capable of moving livestock. In addition, until the U.S. moves to a nationwide radio frequency identification (RFID) system, use of metal and plastic tags create a logistical problem when moving cattle.
Exports of U.S. hay better
While still not strong, October 2020 U.S. hay exports were improved.
At 209,000 metric tons (MT), alfalfa hay exports rebounded from September’s nine-month low. Shipments to China were estimated at 108,565 MT, up about 20,000 MT from September, and Japan at 46,514 MT, up 10,000 MT, accounted for most of the increase.
Exports of other hay rose to 115,304 MT, the highest monthly volume since May. Exports to all major markets were up from September, led by increased shipments to Japan and South Korea.
For more on hay exports and market conditions, check out Progressive Forage’s Forage Market Insights update.
U.S. ag trade balance jumps
The overall U.S. ag trade balance improved substantially.
October 2020 U.S. ag exports were valued at $15.1 billion, topping $15 billion in a single month for the first time since November 2013. October ag imports were estimated at $11.6 billion, resulting in a $3.5 billion ag trade surplus for the month. That’s the largest monthly ag trade surplus since November 2016.
With the large trade surplus in October, the U.S. ag trade balance has moved into black ink for calendar year 2020. Through the first 10 months of the year, the U.S. ag trade surplus now stands at about $1.55 billion, about $728 million less than the same period a year earlier.
Other dairy trade news
Here’s a look at other trade issues affecting U.S. dairy:
- Political change: What impact will the change in U.S. political leadership have on trade policy? It’s too early to tell if we should expect dramatic waves or subtle ripples during the next four years, according to John Holevoet, director of government affairs with Edge Dairy Farmer Cooperative. Expect to see changes in personnel at the office of the U.S. Trade Representative, but new people may not mean dramatic or quick changes in trade policy or the frequency or number of new trade deals being pursued. Expect trade tensions with China to continue. President Donald Trump’s decision to withdraw the U.S. from the Trans-Pacific Partnership (TPP) agreement is probably here to stay because the other countries involved in TPP negotiations have moved on. The U.S. will likely be much more engaged at the World Trade Organization (WTO).
- Global competition: Australia will emerge as a stronger competitor in the global cheese market thanks to drought-breaking rains that will fuel a rebound in milk production in 2020-21, according to the USDA’s Foreign Ag Service. With more milk, cheese is anticipated to see the largest rise in production, with practically all of the increase exported. Japan has consistently been the largest market for Australian cheese, followed by China, Malaysia and South Korea.
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Dave Natzke
- Editor
- Progressive Dairy
- Email Dave Natzke
