U.S. dairy product exports stayed on a record pace in September, 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, export volume rose 7% (up 13,784 metric tons [MT]) on a milk solids equivalent basis, as shipments of whey, cheese, lactose and butter continued to help U.S. suppliers set multiple records for the month. In contrast, U.S. exports of nonfat dry milk/skim milk powder fell for the 10th consecutive month, driven by limited product availability and continued weakness in sales to China and Southeast Asia.
CWT-assisted exports
The National Milk Producers Federation (NMPF) said September Cooperatives Working Together (CWT) program-assisted export 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 dairy export highlights
- Strong U.S. dairy exports weren’t enough to offset the negative trade balance for all of U.S. agriculture in September. The U.S. Department of Commerce estimated the value of U.S. ag exports at $13.6 billion, with ag imports estimated at $15.9 billion. The $2.3 billion ag trade deficit is likely the largest monthly total on record.
- The Department of Commerce/Bureau of the Census estimated U.S. dairy imports at $437 million in September, down 5% from August. Cheese imports were estimated at $141 million, down 6%. Fiscal year (FY) 2022 dairy imports were estimated at $4.87 billion, up 32% from a year earlier. FY 2022 cheese imports were valued at $1.53 billion, up 7%.
- The long-term future for U.S. dairy exports continues to look bright, especially in light of constraints facing major global competitors, according to speakers addressing the USDEC fall membership meeting, Oct. 10-11, in Chicago. USDEC membership now stands at 114 members: 57 processing companies, 19 trading companies, and 37 allied organizations and companies, along with USDEC's founder and primary funder, Dairy Management Inc. (DMI). Following two consecutive record-setting years for U.S. dairy exports, 2022 exports are ahead of last year's pace.
U.S. dairy heifer exports remain in slump
The latest monthly report from USDA’s Foreign Agricultural Service (FAS) estimated September sales of U.S. dairy heifers to foreign buyers at 342 head. As in recent months, dairy replacement exports stayed close to home, with 263 moving to Canada and 79 to Mexico. With the sales slump continuing, year-to-date sales were estimated at 6,925, averaging 769 per month and the smallest January-September volume since 2016.
Exports of beef replacement heifers were even lower than their dairy counterparts. At 261 head, September exports were the second-lowest monthly total of the year, ahead of only August. Year-to-date beef replacement exports are estimated at 6,055.
While global inquiries for U.S. dairy replacement heifers continue to come in, high prices and low inventories keep buyers on the fence, said Tony Clayton, Clayton Agri-Marketing Inc., Jefferson City, Missouri. China has turned to Chile to source pregnant Holstein heifers. Potential shipments to Turkey and Vietnam could boost U.S. export numbers to end the year, he said.
Dairy embryo sales lower
After hitting a 20-month high in August, exports of dairy embryos slipped to a four-month low at 1,031. China remained the largest market for U.S. dairy embryos during the month, but sales dropped to a four-month low at 600. Other secondary markets during the month were the United Kingdom (154), Japan (89) and Germany (87).
For the January-September period, dairy embryo exports totaled 11,949, the highest nine-month total to start the year in the past five years and already surpassing the 2021 annual total of 10,332.
China imported 216 beef embryos from the U.S. during September, taking 71% of the total shipments during the month.
Alfalfa exports slip from August’s record
At 248,209 MT, September alfalfa hay exports to foreign markets dropped about 90,000 MT from August’s record high, with most of the decline attributed to lower sales to China.
Demand for U.S. alfalfa continued to show up in related categories. At 13,450 MT, September exports of dehydrated alfalfa cubes were the highest in 23 months, with a large increase in shipments to the United Arab Emirates. Monthly shipments of sun-dried alfalfa meal were the third highest of the year, thanks to stronger sales to Japan.
Export volumes of other hay continued to weaken. Foreign sales totaled 76,847 MT, the lowest monthly total since at least 2005. Sales to Japan were the lowest since at least 2013. September sales of other hay to South Korea were the third lowest of the year.
For more on hay exports and market conditions, check out Progressive Forage’s Forage Market Insights update.
Other trade news
- The USDEC hosted a discussion with French dairy organization the Centre National Interprofessionnel de l'Economie Laitière (CNIEL) in October to foster greater understanding as the European Union develops its farm-to-fork policies on food production, consumption and trade. USDEC President and CEO Krysta Harden said policymakers should focus on how to further streamline dairy trade between the two markets and ensure that new regulations under consideration respect global dairy production diversity. “Trade needs to be a two-way street, and right now, U.S.-EU dairy flows are already largely a one-way direction,” she said.
- In October, leaders of the NMPF and USDEC, along with several dairy company executives, met with Federal Maritime Commission (FMC) Chairman Daniel Maffei to discuss implementation of the Ocean Shipping Reform Act and ongoing shipping challenges.
- The U.S. will host the International Dairy Federation (IDF) World Dairy Summit, the world’s biggest dairy conference, Oct. 16-19, 2023, in Chicago.
- The value of the U.S. dollar has been hovering near record highs and is unlikely to meaningfully decline anytime soon, according to the CoBank Knowledge Exchange quarterly report. Strength of the dollar will pressure U.S. exports as the global economy struggles and U.S. goods remain expensive, weighing on U.S. manufacturing and trade-related services.
