While cheese exports remained strong, elevated whey and lactose sales provided another boost to July’s global marketing volumes and values, according to a monthly market update from the U.S. Dairy Export Council (USDEC).
Based on data summarized in the most recent U.S. Dairy Exporter Blog:
- Value basis: July 2022 exports were valued at $830.8 million, up $167.4 million (25%) compared to July 2021.
- Volume basis: U.S. cheese exports totaled 37,265 metric tons (MT), up 2% from July 2021, while butterfat exports hit 7,439 MT, up 63%. Exports of U.S. dry whey products increased by 13% to 60,870 MT; lactose sales totaled 38,899 MT, up 22%. With ongoing U.S. supply limitations, July 2022 exports of nonfat dry milk/skim milk powder (-10%, -6,967 MT) and whole milk powder (-35%, 1,496 MT) declined from a year earlier.
- Milk solids basis: July exports totaled 203.3 million pounds on a milk solids equivalent basis, up 5% from a year ago.
Southeast Asia driving success
Southeast Asia was a high point for U.S. dairy exports in July, up 34% on a value basis and 6% based on volume.
Cheese exports to Southeast Asia set a new high for the month, and exports of whey products continued to recover from the 2021 slowdown. Driving whey exports, improvement at West Coast ports, the moderation of U.S. whey prices and the recovery of China’s pig sector have helped lift demand across all geographies, according to USDEC.
For more on dairy product exports, read: July export gain runs growth streak to four straight months.
What’s ahead?
The USDA has substantially boosted forecasts for U.S. dairy product exports in fiscal years (FY) 2022-23. The latest USDA quarterly Outlook for U.S. Agricultural Trade report, released in Aug. 30, projects the value of U.S. dairy exports at a record-high $9.5 billion in FY 2022 (Oct. 1, 2021-Sept. 30, 2022). That’s up from the $8.4 billion forecast in May and up $2.2 billion from total dairy exports in FY 2021. The increase is based on robust shipments to top markets in Mexico, South Korea and Japan. In its initial forecast for FY 2023, the USDA estimated dairy product exports at $9 billion. For more, read: U.S. dairy export outlook surges over $9 billion.
Here’s a look at other export trends followed by Progressive Dairy:
Dairy heifer exports slump
After the USDA’s Foreign Agricultural Service reported a jump in exports of U.S. dairy replacement heifers in June, July sales again slumped to extremely low levels. Sales for the month totaled just 131 head, the second-lowest total for the year. Nearly all the dairy replacements stayed close to home, with 118 moving to Mexico, eight to Canada and five to Taiwan. Through July, exports of U.S. dairy replacements totaled 6,367 head, on pace to be the lowest total since 2016.
Tony Clayton, Clayton Agri-Marketing Inc., Jefferson City, Missouri, said he expects no change in current dairy heifer export market trends. A major contributor continues to be the tight U.S. supply of Holstein heifers bred to Holstein bulls and international buyer reluctance to accept dairy heifers bred to beef bulls.
The impact of recent extreme flooding in Pakistan, the leading buyer of U.S. replacement heifers in 2021 and the first half of 2022, remains unknown, Clayton said. There are estimates that 1 million head of cattle have been lost due to flooding and spread of diseases. High milk prices have midsized and large dairy producers wanting to expand, sending prices for domestically raised dairy heifers higher. That’s pressuring Pakistan’s producers to balance their own expansion with selling dairy replacements to others.
One category of dairy genetics picking up export strength is the sale of embryos. At 1,849, July’s exports were the second highest since December 2020. China remained the largest market for U.S. dairy embryos in July at 1,410, 76% of the total. Sales to the Netherlands, Germany and Japan averaged about 117. For the January-July period, dairy embryo exports total 8,495 head, the highest seven-month total to start the year in the past five years.
Beef female replacement exports totaled 1,254 in July, the second-lowest monthly total of the year. Year-to-date beef replacement exports are estimated at 5,593.
Alfalfa exports higher
At 267,127 MT, July alfalfa hay exports were up 65,000 MT from June and an 11-month high. After slumping slightly in June, sales to China also surged to an 11-month high at 176,154 MT in July, representing 66% of total alfalfa hay exports during the month.
Through July, 2022 alfalfa hay exports totaled 1.63 million MT, on pace to be the third-highest annual total on record, slightly behind export totals in 2017 and 2020.
July sales featured another strong month in shipments of sun-dried alfalfa meal, all to Japan. At 9,593 MT, monthly exports were just 5 MT under June’s all-time record high.
Global sales of other hay told a different story. At 83,184 MT, July exports fell to their lowest level since at least 2005. Shipments to the two largest markets, Japan and South Korea, were down due to stronger domestic inventories and disadvantageous currency exchange rates. Reduced availability of U.S. timothy due to consecutive years of lower harvests is also a factor, making it difficult to compete with adequate supplies of good-quality Canadian timothy and better exchange rates.
Through July, 2022 other hay exports totaled 788,818 MT, on pace to be the lowest annual total since 2018.
For more on hay exports and market conditions, check out Progressive Forage’s Forage Market Insights update.
Other trade news
- While dairy maintains a positive trade balance, the same can’t be said for all of U.S. agriculture. The USDA’s Economic Research Service estimated July’s U.S. ag trade deficit at more than $938 million, the fifth consecutive deficit month. While the fiscal year 2022 ag trade balance is forecast at +$4 billion, the USDA projects the fiscal year 2023 ag trade balance to be -$3.5 billion. The U.S. last had a negative agricultural trade balance in 2019 (-$1.3 billion) and 2020 (-$3.7 billion).
- The USDEC and National Milk Producers Federation (NMPF) called for swift Senate confirmation of Doug McKalip to serve as chief agricultural negotiator at the Office of the U.S. Trade Representative (USTR). McKalip’s nomination was approved by the Senate Finance Committee on Sept. 7.
- The USDEC and NMPF formalized an agreement with Sociedad Rural Argentina (SRA) to foster cooperation and collaboration between the three groups to advocate for science-based regulations across food and agricultural trade policy.
- With COVID-19 restrictions eased, USDEC’s U.S. Center for Dairy Excellence in Singapore is ramping up in-person activities. The site serves as a hub for collaborative dairy innovation in Southeast Asia.
