Suppliers can’t match last year’s hefty powder shipments to Mexico, Southeast Asia.
U.S. exports of nonfat dry milk/skim milk powder (NDM/SMP) have been unable to match last year’s record pace in recent months, dragging on overall trade performance. U.S. suppliers shipped 166,778 tons of milk powder, cheese, butterfat, whey and lactose in October, down 11% from last year. U.S. exports were valued at $466 million, down 1%.
Exports of NDM/SMP in October were 51,394 tons, down 34% vs. last year’s record volume of 77,566 tons. Sales to Mexico and the Philippines were robust last autumn (43,319 tons and 11,287 tons, respectively, in October 2016) but were barely half that (23,872 tons and 6,220 tons, respectively) this year. Shipments to Southeast Asia’s other countries were down as well, amounting to a 33% drop-off for the region. In contrast, exports to China continued to increase; 2017 volume is twice the rate posted in 2016.
(Official USDA data continues to show an increase in WMP exports to Mexico. However, Mexican import data and trade sources don’t corroborate this, and we believe this volume represents SMP sales that were misclassified at the port. Therefore, we’ve adjusted NDM/SMP and WMP trade data for June 2016 to October 2017 to account for this misclassification.)
With more tepid powder exports, U.S. inventories of NDM continue building counter-seasonally. At the end of October, stocks were a record-high 149,000 tons, double the five-year average for that date. The global oversupply in SMP has pushed prices near their lowest level in 14 years.
Cheese exports have declined from the volumes seen in Q2, but remain above year-ago levels. October exports were up 9%. In October, U.S. cheese exporters posted record-high volumes in sales to China (2,028 tons, 82%) and Central America (2,354 tons, mostly from Panama and Guatemala, 42%). In addition, exports to the Middle East/North Africa (MENA) region have improved in recent months; during the August-October period, volumes were up 88%. Shipments to Australia, Japan and South Korea also continue to increase at double-digit rates, while October exports to Mexico were the lowest in three-and-a-half years, down 30% year-over-year.
Whey exports have reached all-time high volumes this year, in the face of steadily falling global prices. Shipments of modified whey products (primarily permeate) have been especially strong. Total whey products exports were up 9% in October, bringing the year-to-date increase to 8%. Exports of modified whey were up 20% in October, while WPC shipments were up 15% and WPI exports were up 22%. Sales to China were flat in October, but exporters shipped more to Mexico and Japan.
Exports of butterfat improved in October, topping 3,000 tons, 13%. Sales to the MENA region were the most in two years and Mexico bought more as well.
Lactose exports remain steady month-to-month. October volumes were 4% below last year, with a sharp drop in sales to New Zealand.
Fluid milk/cream exports were down 26% in October, with a steep fall-off in sales to Canada. In Q4-16, Canada took more than 20,000 liters, a volume unlikely to be matched in 2017.
On a total milk solids basis, U.S. exports were equivalent to 15.2% of U.S. milk production in October, while imports were equivalent to 3.5% of production. In the first 10 months of 2017, exports represented 14.3% of milk solids output.
Alan Levitt is vice president of communications and market analysis at the U.S. Dairy Export Council.