While U.S. dairy product export reports lag the calendar change to a new year, November data showed U.S. dairy exports will certainly set another record in 2022 and are prepared to keep on growing into 2023, according to a monthly market update from the U.S. Dairy Export Council (USDEC).
Based on data summarized in the most recent U.S. Dairy Exporter Blog:
- Value basis: At just under $800 million, November 2022 sales were up 23% (+148 million) compared to the same month a year earlier, building on what already was an annual record set in October. The value of January-November 2022 U.S. dairy exports rose 25% to almost $8.88 billion.
- Volume basis: At 37,495 metric tons (MT), U.S. cheese exports extended their year-over-year growth streak to 17 straight months in November, a 13% increase over the previous year and easily a record for the month. In addition to increased cheddar, Gouda and other natural cheese sales, November also benefited from the continued rebound in U.S. grated cheese exports, predominantly mozzarella/pizza cheese. U.S. whey exports increased 17%, as a huge increase to China helped offset declines in other regions. Butter and lactose exports were strong; of the major product categories, only nonfat dry milk/skim milk powder and fluid milk/cream fell.
- Milk solids basis: November exports on a milk solids equivalent basis were up 9%, putting year-to-date exports up 4% for a total of 2.2 million MT milk solids equivalent. After a slow start, total U.S. dairy exports have exceeded 18% of production (milk solids basis) for most of the year and are likely to surpass last year’s record of 17.3%.
Export drivers, challenges
While much of the whey export growth early in the year was attributed to low-protein whey products, more recent growth has been in high-protein whey exports as U.S. inventories ballooned amid weaker domestic purchases that pushed U.S. manufacturers to look increasingly toward export markets. Corresponding with weaker domestic demand, prices also eased, helping boost foreign demand.
On the commodity side, Chinese whey imports have been on a rebound since late summer, driven by higher pork prices, which incentivized greater whey use in hog feed to accelerate production and growth. USDEC expects to see continued growth in Chinese whey demand into 2023, although lower pork prices in the second quarter of next year could cap volume growth.
In the cheese market, USDEC remains cautiously optimistic for the coming year. However, a rebound in European Union milk production, economic factors that support cheese analogue use in Latin America and potentially tighter U.S. exportable cheese supplies will likely lower the double-digit growth rate seen for much of 2022.
The National Milk Producers Federation (NMPF) said December Cooperatives Working Together (CWT) program-assisted export contracts covered 7 million pounds of American-type cheeses and 37,000 pounds of cream cheese. The products, contracted for shipment between December 2022 and June 2023, are equivalent to 65.2 million pounds of milk (milkfat basis).
With December’s contracts, 2022 CWT sales reached 99 million pounds of American-type cheese, 657,000 pounds of butter, 30.7 million pounds of whole milk powder and 8.8 million pounds of cream cheese, for a total milk equivalent for the year of 1.223 billion pounds (milkfat basis). CWT estimates are based on contracts for delivery, not completed export volumes.
Other dairy export highlights
- Separately, the Department of Commerce/Bureau of the Census estimated January-November 2022 U.S. dairy exports at $8.79 billion, up 25% from the same period a year earlier. Calendar year-to-date dairy imports were estimated at $4.78 billion, up 33%, with cheese imports up 5% at just under $1.44 billion.
- In the final days of 2022, the Senate confirmed two people to key U.S. trade positions. Confirmed were: Alexis Taylor, to the position of USDA’s undersecretary of trade and foreign agricultural affairs; and Doug McKalip, as chief agricultural negotiator in the Office of the U.S. Trade Representative (USTR). Both received praise from USDEC and NMPF.
- The dairy trade relationship between the U.S. and Canadian governments is starting 2023 the same way it began a year earlier. In late December, USTR Katherine Tai requested new dispute settlement consultations with Canada over compliance of dairy obligations under the U.S.-Mexico-Canada Agreement (USMCA).
- The USDA’s Foreign Agricultural Service (FAS) awarded about $5.53 million to USDEC. The fiscal year 2023 dairy funding includes: $4.87 million through the Market Access Program (MAP), providing money for marketing and promotion activities, including market research, technical assistance and support for participation in trade fairs and exhibits; and $659,239 through the Foreign Market Development (FMD) Program, focusing on generic promotion of U.S. commodities, rather than consumer-oriented promotion of branded products.
U.S., global dairy heifer supplies tight
The latest monthly export report from USDA’s FAS estimated November sales of U.S. dairy heifers to foreign buyers at just 363 head as market weakness continues. The exports all stayed close to home, with 218 moving to Mexico and 145 to Canada. Year-to-date sales were estimated at 7,828, averaging 712 per month and now nearing the 15-year low set in 2007.
“I don’t see this situation changing,” said Tony Clayton, Clayton Agri-Marketing Inc., Jefferson City, Missouri.
The U.S. dairy heifer supply remains tight, not only those bred to dairy sires but also open heifers, said Clayton. Supply issues are becoming a worldwide challenge.
“In the past two weeks, we have had more inquiries for cattle than I think we have ever had in a short time period,” said Clayton, citing inquiries from Bangladesh, Egypt, Qatar, Mexico, Turkey, Pakistan, Vietnam and others. “I spoke with a group from Turkey that would like to import 2,000 head every other month. They informed me their European suppliers gave them the same story: There are no cattle available.
“Another party called trying to import 500 head to Libya, and their German supplier told them they could not supply this number,” he continued. “The world is in the same situation. We have made some offers to clients, but we tell them a certain percentage of the shipment will have to be heifers bred to beef bulls. Thus far, clients won’t consider and can’t believe we would even offer this, but this is a sign of the times with the impact of beef semen being used.”
Dairy embryo sales strong
In contrast to live animals, exports of dairy embryos jumped in November. At 2,648, it marked the highest monthly total of the year, narrowly surpassing shipments in January and August. China remained the largest market for U.S. dairy embryos during the month at 1,966. South Korea (266) and Pakistan (115) each purchased their first packages of dairy embryos for the year.
For the January-November period, dairy embryo exports totaled 15,553, easily the highest 11-month and annual totals in the past five years.
Hay exports remain slower
At 226,113 MT, November alfalfa hay exports picked up slightly from October but were still the third-lowest monthly total of the year.
Increased sales to Japan, Saudi Arabia, South Korea and Taiwan offset a 20,000 MT decline to China, where sales hit a six-month low. At 128,340 MT, sales to China represented 58% of all alfalfa hay exports in November.
Demand for other U.S. alfalfa products was mixed. At 4,118 MT, November exports of dehydrated alfalfa cubes rebounded slightly from a 13-year low in October. Exports of deyhydrated alfalfa meal came off a 37-month low at 1,771 MT.
Export volume for other hay hit a five-month high in November but remained well below historical levels. Foreign sales totaled 89,948 MT, up about 3,000 MT from the month before. At 55,830 MT, November sales to Japan were the highest since June and represented about 62% of the monthly total. Albeit a small increase, sales of other hay to South Korea were the highest in three months.
For more on hay exports and market conditions, check out Progressive Forage’s Forage Market Insights update.
Ag trade balance
After turning in agricultural trade deficits every month, March through September 2022, the U.S. ag trade balance was positive for a second consecutive month in November. The U.S. Department of Commerce/Census Bureau estimated the value of agricultural exports at $17.5 billion and the value of ag imports at $16 billion, yielding a positive trade balance of over $1.4 billion for the month, the highest since December 2021. Nonetheless, the 2022 calendar year agricultural trade deficit stands at $3.2 billion.