Improved cheese shipments highlighted February 2019’s U.S. export performance, with improved sales in nearly every major market. Cheese exports totaled 32,515 tons, up 16 percent from February 2018. On a daily-average basis, that’s the second-highest total ever, falling just short of the record achieved in March 2014.
Here’s a summary of February 2019 numbers:
• Volume basis: Overall, suppliers shipped 160,457 tons of milk powders, cheese, butterfat, whey products and lactose in February, up from the previous three months, but down 14 percent from the strong performance of February 2018. Totals were pulled down by continued weakness in whey and other exports to China due to retaliatory tariffs in place since last summer, plus the spread of African swine fever.
• Value basis: Total February 2019 U.S. exports were worth $68.2 million, up 3 percent from a year earlier.
• Total milk solids basis: U.S. exports were equivalent to 14.3 percent of U.S. milk production in February, the highest figure since October 2018.
Dairy heifer exports increase
Dairy replacement heifer exports increased in February, thanks to a large shipment to Vietnam. At 2,616 head, monthly sales were the highest since October 2018. The shipments were valued at $4.25 million.
Vietnam was the leading destination for U.S. dairy replacement heifers in February 2019, at 1,625 head. Buyers in Mexico took 826 head.
Tony Clayton, Clayton Agri-Marketing Inc., Jefferson City, Missouri, predicts continued strength in U.S. cattle sales for the rest of the year. He said interest has been high for short-bred and open heifers, and expects shipments to Qatar, Egypt and Pakistan by the end of May. Mexico remains a strong market. Algeria continues to express continued interest for cattle, but negotiations over health protocols are entering a third year.
For Gerardo Quaassdorff, T.K. Exports Inc., Boston, Virginia, the export outlook for 2019 is “cautiously promising.” Price remains king, and any strengthening in the U.S. dollar against local currencies reduces or postpones orders, or results in some cancellations. While interest in U.S. replacements remain high, the challenge is that sales depend on access to favorable lines of credit, either through local subsidies or direct low-interest loans, he said.
Quaassdorff agrees with Clayton that health protocol negotiations with Northern African countries have slowed, with little progress in the past year. Heifer suppliers from the European Union, and France in particular, have been influential with decisionmakers in Morocco and Algeria.
Although not as sophisticated as in the U.S., dairy producers in some countries are using genomic testing to make breeding decisions and using beef semen on the lower end of their dairy herds.
Pace of hay exports remains slower
U.S. hay exports continued at a subdued pace in February, limited by tight supplies in the U.S., normal seasonal weakness and import policies among major hay buyers.
Alfalfa hay shipments totaled 186,815 metric tons (MT), the second-lowest monthly total in 13 months. The month’s exports were valued at $59.5 million.
Among leading markets for alfalfa hay, the top buyer continued to be Japan at more than 55,000 MT for a third consecutive month. Although February shipments to China nearly doubled from January to 48,419 MT, sales remain well below pre-tariff levels. Sales to Saudi Arabia, the United Arab Emirates (UAE) and South Korea were also down slightly from January.
At 105,641 MT, shipments of other hay slumped to a seven-month low. Total shipments were valued at $35 million. Among leading markets for other hay, a small increase in February sales to South Korea was offset by declines in Japan, Taiwan and UAE. Japan remained the leading market, taking more than 61,000 MT.
U.S. ag trade surplus increases
February’s 2019’s U.S. agricultural trade surplus improved to about $929 million, the highest since November 2018. Monthly exports were estimated at $10.9 billion, down more than $1 billion from January, but imports declined even more to $9.3 billion.
USITC releases USMCA analysis
The U.S. International Trade Commission (ITC) released its report assessing the likely impact of the USMCA. The report, “United States-Mexico-Canada Agreement: Likely Impact on the U.S. Economy and Specific Industry Sectors,” provides an assessment of the likely impact of the agreement on the U.S. economy as a whole and on specific industry sectors and the interests of U.S. consumers.
The ITC estimates small gains in market access for the U.S. dairy sector. Specifically, modeling results estimate $314.5 million (7.1 percent) of additional exports over the baseline, including $227 million to Canada and $50.6 million to Mexico. U.S. imports of dairy products are also estimated to grow, but by a smaller amount – $227.9 million (9 percent).
Tom Vilsack, president and CEO of the USDEC, said the ITC study is important because it moves the USMCA process closer to ratification.
“We shipped $1.4 billion in dairy products to Mexico last year, which accounts for more than one-fourth of U.S. dairy exports,” he said. “Without a trade treaty with Mexico in place, the dairy industry would be hard-pressed to maintain and expand these sales, as our competitors in Europe are expected to implement a lucrative new trade arrangement with Mexico by next year. Moreover, without USMCA, we lose out on the new rules this deal puts in place such as key reforms to Canada’s dairy system.”
“When examining USMCA’s benefit to the economy, we believe it is important to keep the full picture in mind of what’s at stake here,” explained Jim Mulhern, president and CEO of the National Milk Producers Federation. “USDA recently reported that our country lost an average of seven dairy farms a day in 2018 due to the poor economic conditions in rural America. That’s a startling number, and reversing this alarming trend is what we should be discussing. USMCA helps put us on a path to doing that by safeguarding our largest export market and instituting valuable new improvements to dairy trade in North America.”
The report was requested by the U.S. Trade Representative and required by the Bipartisan Congressional Trade Priorities and Accountability Act of 2015. Negotiators approved the USMCA last fall, but it still awaits ratification by governments of all three countries. 
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Dave Natzke
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