With struggles across nearly all categories, U.S. dairy product exports declined for the third straight month in May. Hay exports remained soft, and the overall U.S. agricultural trade deficit was the largest since late 2020. Here’s a look at Progressive Dairy’s monthly ag trade summary.
Dairy products
On a volume basis, May 2023 dairy product exports were down 13% from the same month a year earlier, the equivalent of 29,296 metric tons (MT) milk solids equivalent (MSE), as nearly all products fell below prior-year levels. Year to date, 2023 export volumes are down 4%, with total export values down 7% compared to January-May 2022.
Cheese continued to struggle in May, declining 18%, reflecting the uncompetitive prices that persisted for much of the fourth quarter of last year and into the first quarter of 2023, according to a monthly market update from the U.S. Dairy Export Council (USDEC).
Exports of low-protein whey exports were down 29%. On a positive note, exports of nonfat dry milk/skim milk powder held close to even (-3%), and high-protein whey trade increased (17%).
Separately, the Department of Commerce/Bureau of the Census estimated U.S. dairy exports through the first eight months of fiscal year 2023 (October 2022-May 2023) at almost $5.95 billion, up 3% from the same period a year earlier. Fiscal year-to-date dairy imports were estimated at $3.73 billion, up 21%, with cheese imports up 10% at $1.1 billion.
Looking ahead, USDEC’s William Loux forecasts an improved outlook for dairy product exports in the third quarter and lasting through the end of 2023, particularly for cheese and proteins. Even so, expectations are for limited upside until economic conditions improve, or competitors’ milk production slows down.
CWT-assisted exports
The National Milk Producers Federation (NMPF) said June 2023 Cooperatives Working Together (CWT) program-assisted export contracts covered 4.7 million pounds of American-type cheeses, 220,000 pounds of butter, 6.6 million pounds of whole milk powder, 22,000 pounds of anhydrous milkfat and 1.1 million pounds of cream cheese. The total milk equivalent (milkfat basis) for the month was 105.7 million pounds.
Year-to-date CWT export sales total 61.7 million pounds of American-type cheeses, 815,000 pounds of butter, 31.2 million pounds of whole milk powder, 5.2 million pounds of cream cheese and 24,000 pounds of anhydrous milkfat. This brings the total milk equivalent for the year to 513.4 million pounds on a milkfat basis.
The amounts of dairy products and related milk volumes reflect current contracts for delivery, not completed export volumes. CWT pays export assistance to the bidders only when the export and delivery of the product are verified by the required documentation.
U.S. dairy, beef genetics exports
The latest monthly export report from USDA’s Foreign Agricultural Service (FAS) estimated May 2023 sales of U.S. dairy replacement heifers to foreign buyers at just 273 head, the lowest monthly total since January. Most of the shipments stayed close to home, with 161 moving to Canada and 75 to Mexico. A combined 37 went to Colombia, Panama and Costa Rica.
A large shipment of heifers to Turkey will likely show up on the USDA’s June export report, said Tony Clayton, Clayton Agri-Marketing Inc., Jefferson City, Missouri. With interest in U.S. dairy replacements high, a further upturn is expected in third and fourth quarters of 2023.
However, recent outbreaks of vesicular stomatitis (VS) in California and Texas will have some negative impact on some foreign markets, Clayton said. Additionally, “tremendous numbers” of open dairy heifers are moving into commercial feed yards as beef prices remain strong.
Besides live dairy replacements, exports of dairy embryos hit a five-month high at 1,884. Of those, 664 were shipped to China, which has purchased more than 52% of the U.S. dairy embryos sold so far this year. The year-to-date U.S. total stands at 5,644, about 658 ahead of last year’s record pace.
Beef cattle heifer exports were estimated at 1,306 head, with most (909) sold to buyers in Canada; 364 went to Mexico. Small numbers were sold to Botswana and Thailand.
Beef cattle embryo exports for the month were estimated at 415, bringing the year-to-date total to 2,451.
Hay exports weaker
U.S. hay exports remain weaker through the first five months of 2023.
May exports of alfalfa hay were estimated at 167,159 MT, a slight uptick from April; January-May sales are still the smallest to start a year since 2015. Sales to China remained subdued at 49,943 MT in May, with sales topping 40,000 MT to both Japan and Saudi Arabia.
Exports of alfalfa cubes (7,105 MT) and meal (3,564 MT) were mostly higher compared to April.
May exports of other hay also remained slower at 77,865 MT. Year-to-date sales total 384,100 MT, the smallest five-month total to start a year in at least two decades.
Ag trade balance: A building negative
May 2023 turned in the largest U.S. ag trade deficit in 30 months. The U.S. Department of Commerce/Census Bureau estimated the value of May agricultural exports at $13.93 billion and the value of ag imports at $16.95 billion, yielding a trade balance of -$3 billion for the month, the largest monthly deficit since December 2020. The calendar year agricultural trade balance is about -$6.8 billion through the first five months of 2023.
