Exports flat in October, with sales down in China but up 14 percent elsewhere, including large gains in SE Asia and Mexico.
U.S. dairy exports are on track for a record year despite flat sales on both a volume and value basis in October due to a loss of sales to China since implementation of retaliatory tariffs.
Shipments of milk powder, whey, lactose, cheese and butterfat to China were down 47 percent in October, while U.S. exports elsewhere were up 14 percent, with large gains in sales to Southeast Asia and Mexico.
On a total milk solids basis, U.S. exports were equivalent to 15.3 percent of U.S. milk production in October, bringing the year-to-date percentage to 16.3 percent. The calendar year record is 15.4 percent in 2013.
In the four months since China put additional tariffs in place, U.S. whey exports to China were down 36 percent (-6,909 tons/month) compared with a year ago. SMP sales were down 54 percent (-1,333 tons/month), WMP sales were down 97 percent (-1,288 tons/month) and cheese exports were down 56 percent (-752 tons/month). On a value basis, total dairy exports to China were down 36% in the July-October period.
Meanwhile, exports to Mexico and Southeast Asia were up 25 percent and 29 percent, respectively, in October (on a value basis) – mostly on the strength of improved sales of nonfat dry milk/skim milk powder (NDM/SMP).
U.S. exports of NDM/SMP totaled 60,672 tons in October, a 19 percent increase vs. a year ago. The 2018 total through 10 months – 617,096 tons – has already established a new annual high, with two months to go. Shipments to Mexico (32,734 tons, +37 percent) remained heavy in October, while sales to Southeast Asia (a six-month high of 20,401 tons, mostly Indonesia, Philippines and Malaysia) were up 39 percent. In contrast, sales to China, Peru, Pakistan, Japan and the Middle East/North Africa (MENA) region were negligible, down more than 5,800 tons between them compared with a year ago.
U.S. suppliers also moved greater volumes of whole milk powder (WMP) to Southeast Asia. Total September exports were 4,227 tons (+124 percent) and nearly half went to Vietnam. In contrast, sales to China were just 38 tons, a fraction of what was shipped last year. U.S. WMP exports have doubled this year.
(USDEC has adjusted official U.S. Bureau of Census trade data for NDM/SMP and WMP since June 2016 to account for shipments we believe are misclassified.)
Whey exports in October were just 40,765 tons, down 19 percent from a year ago. All the sub-categories of whey were markedly lower. Exports to China in October were just 10,167 tons (-51 percent), the worst month since November 2015. For the third straight month most of the decline came from lower sales of modified whey (permeate). Once again, suppliers diverted whey sales to Southeast Asia, where volumes were up 19 percent, including record sales of modified whey (permeate). Sales to Japan and South Korea also were higher.
Cheese exports (26,931 tons) were on par with a year ago in October. Cheese shipments to Mexico improved despite retaliatory tariffs, up 31 percent against a weak comparable. U.S. suppliers also saw slower sales to China (-59 percent), Japan (-26 percent) and Australia (-25 percent). The most notable gains were posted in sales to the MENA region (+36 percent) and Southeast Asia (+28 percent).
Butterfat exports totaled 5,603 tons (+75 percent), the most in more than four years. Gains were led by record sales to Mexico (3,156 tons).
Exports of MPC continued to track higher in October. Shipments of 3,362 tons were more than double year-ago levels. Sales to Mexico were the most in nearly a decade, and volumes to Canada and the MENA region were higher as well.
Shipments of fluid milk and cream were up 18 percent. Sales to Canada and Mexico were the highest of the year.
Suppliers shipped 176,948 tons of milk powders, cheese, butterfat, whey products, and lactose in October, up 2% from October 2017. Total U.S. exports were worth $459.8 million, 1 percent below a year ago. In the first 10 months of 2018, dairy exports totaled $4.71 billion, 4 percent more than the same period in 2017, while overall volume was up 15 percent.
On a total milk solids basis, U.S. exports were equivalent to 15.3 percent of U.S. milk production in October, bringing the year-to-date percentage to 16.3 percent.
Al Levitt is vice president of communications and market analysis and Marc Beck is executive vice president and business unit director, Middle East/North Africa, at the U.S. Dairy Export Council.