International customers remain eager for U.S. dairy products even as macroeconomic concerns abound, setting a course for record highs for both export volume and value in 2022, 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: August 2022 dairy product exports were valued at $832.2 million, up $158.7 million (23%) compared to August 2021. Year-to-date (January-August) exports are valued at nearly $6.5 billion, up 26% from a year earlier.
- Volume basis: Aside from nonfat dry milk/skim milk powder (NFDM/SMP), August 2022 U.S. dairy exports were strong across other product categories compared to the same month a year earlier. Butterfat exports have proven resilient despite higher prices, jumping 3,295 metric tons (MT), up 71%. Cheese exports remained solid, climbing 6% (+2,130 MT), with notable gains to Mexico, South Korea and Saudi Arabia. Sales of sweet whey and lactose to China lifted U.S. aggregate export volume. Total shipments of dry whey to all markets reached a 17-month high of 22,634 MT, an increase of 30% from a year earlier.
- Milk solids basis: August exports on a milk solids equivalent basis were up 6% from a year ago; year-to-date exports are up 3%.
Driving success
While Southeast Asia has received a lot of attention, the Latin America market has been another key to success in 2022. Despite significant consumer inflation, year-to-date export volumes (milk solids equivalent basis) to Mexico are up 3%, powered by a 19% increase in cheese. U.S. dairy exports to Central America and the Caribbean have grown by more than 25%, and volume to South America is up 10%. For more from USDEC, click here.
What’s ahead?
Plenty of questions remain regarding whether durable growth in Latin American markets can be maintained, especially given the uncertainty of the economic environment, but the return on U.S. dairy’s investment in the region is clear, according to USDEC staff.
And, while still far below the highs experienced in the depths of African swine fever, pork prices in China are likely sufficient to encourage investment and additional utilization of whey as a feed input. Ultimately, so long as pork prices hold in China, so too should U.S. whey exports to the country.
On the flip side, NFDM/SMP exports remain hampered by limited production. With U.S. milk production bouncing back, supply availability should increase and boost U.S. exports to Asia in in the fourth quarter of 2022 and into 2023.
For more, read: U.S. dairy export outlook surges over $9 billion.
CWT-assisted exports
The National Milk Producers Federation (NMPF) updated Cooperatives Working Together (CWT) program-assisted export contracts. September 2022 sales contracts covered 11 million pounds of American-type cheeses, 198,000 pounds of butter and 403,000 pounds of cream cheese. The products, contracted for shipment between September 2022 and March 2023, are equivalent to 113 million pounds of milk (milkfat basis).
Through the first nine months of the year, contracts total 81.1 million pounds of American-type cheese, 657,000 pounds of butter, 30.3 million pounds of whole milk powder and 7.5 million pounds of cream cheese, for a total milk equivalent for the year of 1.04 billion pounds (milkfat basis). CWT estimates are based on contracts for delivery, not completed export volumes.
Other trade news
- In a letter to U.S. Trade Representative Katherine Tai, heads of the NMPF, USDEC and International Dairy Foods Association (IDFA) joined other commodity export organization leaders in urging the U.S. to push for reforms to the World Trade Organization (WTO) dispute settlement process. In the letter, they said the lengthy and frustrating process for resolving international trade disputes undermines export opportunities for U.S. farmers.
- In late September, six U.S. dairy producers and members of the USDEC staff visited Chile, an emerging U.S. dairy export market. U.S. exports to Chile grew modestly, up 56% in volume and 35% in value from 2016-2021. In contrast to more established markets like Mexico, Chilean importers, distributors, food and beverage manufacturers, and consumers remain less familiar with U.S. dairy products.
- Michael Best Strategies’ weekly trade review report had mixed news. Ship waiting lines in ports of Los Angeles and Long Beach were shorter, and the time for a container to cross the Pacific Ocean fell to 83 days. However, within the continental U.S., low water levels on the Mississippi River were causing barge backups and forcing loading delays.
- Introduced in September, the Cultivating Revitalization by Expanding American Agricultural Trade and Exports (CREAATE) Act of 2022 would increase funding for two programs that support U.S. dairy exports. The bill would boost funding for the Market Access Program (MAP) and Foreign Market Development (FMD) Program, both administered by USDA’s Foreign Agricultural Service (FAS). The bill was referred to the Senate Ag Committee.
- The U.S. will host next year's International Dairy Federation (IDF) World Dairy Summit, the world’s biggest dairy conference, Oct. 16-19, 2023, in Chicago.
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