December 2023 U.S. agricultural export numbers revealed that despite limited growth in the dairy products sector, replacement heifer exports finished the year at the second-highest total since 2018. Here’s Progressive Dairy’s 30,000-foot view at dairy-related export categories.
Dairy product export growth limited
Full-year export volume gains in high-protein whey and lactose, up 18% and 5%, respectively, were not enough to offset declines in other categories. The value of U.S. dairy exports finished the year at $8.11 billion. While the second-largest value in history, it is down 16% from 2022’s record year, according to the U.S. Dairy Export Council’s monthly market update.
Trends impacting U.S. dairy exports did not waiver in the year’s end. Elevated inflation, sluggish demand with economic conditions in crucial export markets (China), increased milk output from competing suppliers (the European Union and New Zealand), along with domestic U.S. dairy product prices that were higher than global prices, all redirected exports from the U.S. to finish the year with a 7% decline in milk solids equivalent (MSE).
The good news is that there were positive signals to close out the year, including cheese exports up 1% and nonfat dry milk/skim milk powder (NFDM/SMP) also up 1%. December marked the second straight month of increased shipments of NFDM/SMP to Southeast Asia, an indication demand in that region is recovering.
CWT-assisted exports
In their latest report, National Milk Producers Federation (NMPF) stated December Cooperatives Working Together (CWT) program-assisted member cooperative year-to-date export sales totaled 15.6 million pounds of American-type cheeses, 6.9 million pounds of whole milk powder and 842,000 pounds of cream cheese. The products went to 13 countries in four regions.
The contracts for quarter four of 2023 were the equivalent of 201.1 million pounds of milk on a milkfat basis. Over the last 12 months, CWT-assisted sales were the equivalent of 957.5 million pounds of milk on a milkfat basis. The amounts reflect current contracts for delivery, not completed export volumes.
The current CWT program is set to expire at the end of 2024. A task force established by NMPF is currently reviewing strategies that grow U.S. dairy exports while at the same time maximizing those positive impacts on producers’ milk checks, all while not duplicating efforts of existing dairy export strategies. The task force will share preliminary recommendations later this spring.
Dairy heifer sales end year strong
Although softening slightly in December, demand from China and countries seeking to rebuild dairy herds decimated by outbreaks of foot-and-mouth disease (FMD) propelled 2023 U.S. dairy replacement heifer exports to the second-highest total since 2018.
Based on data from the USDA’s Foreign Agricultural Service (FAS), December 2023 export sales of dairy heifers totaled 1,844 head, a three-month low. Nonetheless, the 2023 total reached 18,775 head, up more than 8,000 head from 2022’s 15-year low.
Another large shipment (1,678 head) of dairy replacement heifers went to Saudi Arabia in December, pushing fourth-quarter and 2023 totals to that country to 7,423 head, the leading market for the year.
Although quiet to end the year, Turkey was the second-leading dairy heifer market in 2023 at 6,021 head. U.S. neighbors Mexico and Canada were destinations for 1,632 and 1,630 heifers, respectively, in 2023.
Besides live dairy replacements, exports of dairy embryos were estimated at 372 in December, a monthly low for the year. The 2023 total was estimated at 10,090, down nearly 7,500 from a year earlier. China was the leading market for dairy embryos in 2023 at 4,516.
Hay exports mixed
The pace of alfalfa hay exports increased to a three-month high in December, thanks to a jump in sales to China. Monthly exports were estimated at 210,626 metric tons, with sales to China topping 112,400 metric tons, a high for the year. Sales to Saudi Arabia also hit a three-month high at 31,707 metric tons.
Looking at annual totals, alfalfa hay exports fell to 2.18 million metric tons, a nine-year low. Much of the decline can be attributed to a midyear softening of sales to China, which was the destination for about 41% of all U.S. alfalfa hay exports during the year.
At 83,124 metric tons, December exports of other hay were the lowest since August, with sales to both Japan and South Korea hitting five-month lows.
For the year, exports of other hay continued to soften, with an annual total of about 994,432 metric tons, the lowest volume in at least 17 years. Japan was the destination for 53% of other hay shipments during the year, followed by South Korea at 26%.
Year ends with negative trade balance
December’s U.S. agricultural trade balance rounded out a year of mostly trade deficits month over month.
The U.S. Department of Commerce/Census Bureau estimated December agriculture exports at $15.5 billion and imports at $15.66 billion, resulting in a negative trade balance of $161 million for the month. This brought the 2023 calendar year agricultural trade deficit to a record-high $20 billion.
Due to November’s slight agricultural trade surplus of $98.96 million bucking monthslong deficits, the fiscal year-to-date (October-December 2023) balance settled at a deficit of $323 million.
