In August, U.S. dairy exports were driven by the continued demand for cheese, butter, whey, and lactose around the world.
With U.S. milk production on the rise again in August, it was clear that international customers want more U.S. dairy products, even though there are many worries about the economy as a whole.
In August, the amount of milk solids equivalent (MSE) that the U.S. exported went up by 6% (+12,291 MT MSE). With more cheese and butter going overseas and prices going up, the value went up even more, jumping 23%, or $158.7 million. Year-to-date (YTD), U.S. dairy exports have done better than expected and are on track to set new volume and value records again in 2022, with exports up 3% and 26%, respectively.
Except for non-fat dry milk/skim milk powder (NFDM/SMP), exports of U.S. dairy products were strong in all other complexes. Even though prices have gone up, butterfat exports have gone up by 71% (3,295 MT). Cheese exports stayed strong, increasing by 6% (2,130 MT), with Mexico, South Korea, and Saudi Arabia showing the most growth. And exports of sweet whey and lactose to China, which went up by 3,700 MT and 4,183 MT, respectively, really helped to boost the total amount of U.S. exports.
On the other hand, NFDM/SMP exports are still limited by low production (-8% YTD), and U.S. shipments fell 17% in August (-13,298 MT). Positively, exports to Mexico stayed about the same, dropping by only 1% (454 MT), and the rest of Latin America bought a lot more U.S. NFDM/SMP, going against the general trend (+50%, +3,070 MT). The main reason for the overall drop was a huge drop in Southeast Asia (-40%, or -11,768 MT). With U.S. milk production on the rise again, there should be more milk available, which should boost U.S. exports to Asia in Q4 and through 2023.
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For detailed data and charts, check out USDEC’s Data Hub
Now, let’s talk about the two main things we learned:
Key to success in 2022: Latin America
If USDEC’s recent mission of farmers to Chile is any indication of the U.S. dairy industry’s long-term commitment to Latin America, then the impressive growth in exports to the region in 2022 shows that the industry’s commitment is paying off.
The first thing that comes to mind when you think of the US’s largest market by value is Mexico. Even though prices went up a lot for consumers in 2022, our neighbour to the south had a strong market. Overall, U.S. dairy exports to the country are up 3% (+8,802 MT MSE) so far this year, and August data showed that steady growth continued (+3%, +1,439 MT MSE). In 2022, U.S. cheese exports to Mexico have grown by more than 13,000 MT, or 19%, more than exports to any other market. This is a big deal.
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But Mexico is not the only country in Latin America where demand is going up. Year-to-date, U.S. dairy exports to Central America and the Caribbean have grown by more than 25%, or 15,892 MT MSE, and exports to South America have grown by 10%, or 7,556 MT MSE. Cheese exports to Central America and the Caribbean have been especially notable, with Panama (+3,645 MT) and the Dominican Republic (+1,910 MT) leading the way.
Still, cheese is not the only reason why Latin America is growing. In fact, NFDM/SMP exports to Central America and the Caribbean are up by more than a third (+34%, +7,671 MT), which is a rare bright spot for NFDM/SMP exports. South America is also a good market for whey, even though it has been a small market in the past. Shipments of dry whey to South America rose 152% in August (+655 MT) and 58% so far this year (+2,593 MT).
There are still many questions about how long this growth will last, given how uncertain the global and Latin American economies are, but it is clear that U.S. dairy’s investment in the region is paying off.
Recovery in the whey complex was led by dry whey.
August was a good month for most whey products. Specifically, the amount of dry whey shipped reached a 17-month high of 22,634 MT, which was a 30% increase from the same time last year. This was the third straight month of year-on-year growth after a rough start to 2022.
Exports of dry whey dropped by almost 20% in the first five months of the year compared to the same time last year. But according to the most recent data, shipments have gone up 16% in the last three months. And if the trade trends of August continue for the rest of the year, U.S. exports of dry whey will rise overall in 2022, despite a slow start.
China’s market was mostly to blame for the sharp drop and now the rise. For the first time in 13 months, dry whey shipments to China were higher than they were a year ago (+52%). This happened in August. Shipments totaled 10,797 MT, which was the same as August 2020 (11,305 MT) and more than any other month since May 2021.
Positively, the growth in whey in August wasn’t just in dry whey. At 20,096 MT (+7%, +1,335 MT), shipments of whey permeate under the “modified whey, not elsewhere specified” code were the fourth highest on record. Only the three months before were higher. Shipments of whey protein concentrate with the HS code 0404.10 were also impressive, up 35% year-over-year (+4,048 MT). Exports to China and South America went up by 79% (+3,752 MT) and 1,414% (+1,121 MT), respectively.
Overall, whey exports, especially to China for sweet whey and permeate, are getting better because pork prices keep going up. Even though pork prices are still not as high as they were during the height of African Swine Fever, they are likely high enough to encourage investment and more use of whey as a feed ingredient. In the end, U.S. whey exports to China should stay the same as long as pork prices in China stay the same.
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Source: US Dairy Exporter Blog
