U.S. dairy product exports in October were paced by record shipments of nonfat dry milk/skim milk powder (NDM/SMP) to Southeast Asia, plus strong sales of cheese to Mexico and lactose to New Zealand. Here’s a summary of the numbers from the U.S. Dairy Export Council (USDEC):
- Volume basis: U.S. suppliers shipped 176,896 tons of milk powders, cheese, whey products, lactose and butterfat in October, almost identical to the total volume shipped the same month a year ago.
Exports of NDM/SMP were the most in 18 months and the third-highest volume ever. Gains were primarily driven by Indonesia and Vietnam, but exporters found new customers in Colombia and New Zealand as well.
Cheese exports were up 6% from last year but mixed across markets. Shipments to Mexico were the most in 16 months, and sales to Southeast Asia were up 43%. However, volume to most other top customers were lower, likely due to higher U.S. benchmark prices relative to world prices.
Whey sales remain depressed in the face of continued lost demand from China.
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Value basis: The value of all dairy product exports was $527.7 million, up 15% from the same month a year earlier and the most since May 2019.
- Total milk solids basis: U.S. exports were equivalent to 15.2% of U.S. milk solids production in October (Table 1). Exports accounted for 14.4% of production in the first 10 months of the year.
Dairy heifers: October sales a 12-month high
Looking at other export categories followed by Progressive Dairy, exports of U.S. dairy replacement heifers hit a 12-month high at 4,613 head. Large shipments to Pakistan (1,752 head) and Egypt (1,503 head) each surpassed the total from traditional buyers Mexico (897 head) and Canada (461 head) combined.
The strong month pushed year-to-date dairy heifer exports stand to 14,563 head, still the lowest 10-month total in three years.
October dairy heifer exports were valued at about $10.3 million, raising the year-to-date total to about $26.7 million.
For Tony Clayton, Clayton Agri-Marketing Inc., Jefferson City, Missouri, Egypt is a hot market, with Vietnam not far behind. At Progressive Dairy Extra’s deadline, his company was loading 2,974 head for shipment to Egypt, and another shipment of about 3,000 head from the U.S. was planned for January 2020. In addition, there are two ships of cattle heading to Vietnam, one in December and one in January 2020.
The ability to source dairy heifers that are bred to dairy bulls is becoming a problem for exporters, Clayton said, and the increasing number of Holstein heifers bred to beef bulls could have an impact on export sales of Holstein heifers in the first half of 2020.
China alfalfa purchases a record
U.S. October 2019 alfalfa hay exports surged to a record monthly high of 286,608 metric tons (MT), with sales to China hitting 128,582 MT, also a U.S. record high for any month to any single country. October’s total pushed the alfalfa hay export year-to-date total to 2.25 million MT, ahead of the record-setting pace of 2017.
Through October, China has purchased about 30% of all U.S. alfalfa hay exports for the year.
The busiest season for hay purchases is October through January. According to Christy Mastin, international sales manager with Eckenberg Farms Inc., Mattawa, Washington, September and October U.S. sales were further boosted as Chinese buyers moved to obtain alfalfa hay before tariff increases that were scheduled for December. Then, the announcement that tariffs were decreased altogether caused an additional round of buying, and Mastin expects to see strong Chinese purchases through the end of the year.
While the increase was less dramatic, exports of other hay rose to 121,364 MT in October, the largest volume since March. Monthly shipments to Japan (64,636 MT) were the highest since June, and sales to South Korea (33,440 MT) were the high for the year. Year-to-date exports of other hay nudged above 1.14 million MT, ahead of last year’s pace.
October U.S. exports of alfalfa meal and alfalfa cubes were also the highest in several months.
For more on hay exports and market conditions, check out Progressive Forage’s Forage Market Insights update.
October ag trade surplus jumps
Overall, October 2019 U.S. ag trade turned in the largest monthly surplus in 11 months. Exports were valued at $12.08 billion, while ag imports were estimated at $10.92 billion, resulting in a $1.12 billion trade surplus.
With October’s total, calendar year 2019 exports hit $116.3 billion, and imports were estimated at just under $110 billion, leaving an ag trade surplus of about $2.2 billion.
Other dairy trade news
- Japan passed “phase one” of the U.S.-Japan Trade Agreement, and officials with USDEC and the National Milk Producers Federation (NMPF) are urging U.S. trade negotiators to swiftly complete a “phase two” agreement in order to maximize opportunities for U.S. dairy farmers and processors. A 2019 USDEC study found that if the U.S. has at least the same market access as its competitors, the U.S. could roughly double its share of the Japanese market over the next 10 years.
- Despite trade policy challenges in China and other markets, USDEC President and CEO Tom Vilsack sees many reasons for optimism in 2020 and beyond. The interim U.S.-Japan trade agreement and anticipated passage of the U.S.-Mexico-Canada Agreement will provide greater access to those important markets, while new initiatives in Southeast Asia and elsewhere will elevate U.S. dairy’s presence overseas and build demand.
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Dave Natzke
- Editor
- Progressive Dairy
- Email Dave Natzke
