February dairy export value sets new record
According to the US Dairy Export Council (USDEC), continued high prices and increased high-value exports pushed up the value of US dairy exports in February.
Overall export volumes, however, declined due to supply constraints and higher prices. Write in the most recent U.S. Dairy Exporters BlogUSDEC staff summarized February 2022 dairy export data and discussed the main reasons for the discrepancy between volume and value:
- Basis of value: The total value of U.S. dairy exports in February 2022 jumped 23% from a year ago to $696.8 million, a new record for the month.
- Volumetric basis: Strong US shipments of cheese, butterfat and lactose nearly offset declines in milk powder and whey, but fell by little. US butterfat shipments jumped 75% to 6,755 metric tons (MT), the strongest month for US butterfat exports since April 2014. US lactose exports rose 15% to 28 776 MT and cheese by 9% to 32,953 MT, setting a record for the month and extending the year-on-year growth streak to eight consecutive months.
This was offset by declines in skim milk powder/skimmed milk powder (NFDM/SMP) volume for most major buyers, driven by declines in the two main US milk powder markets, Mexico and Italy. ‘South East Asia. Weaker Chinese demand continues to dampen US whey exports, but overall volume in February ended better than expected, falling only 4.5%.
- Milk Solids Base: At 175,602 MT, the export volume of dairy solids decreased by 1%.
What awaits us?
Global demand for cheese remains strong, and tight supply and favorable prices continue to benefit US suppliers. Much of the growth in US cheeses in February came from a 59% increase in cheddar volume, which was mainly driven by competitive pricing, available supply and good demand.
There were some encouraging signs for whey in February, including a 14% increase in modified whey shipments and a much stronger buying presence from Japan.
The recovery of US dairy exports to Mexico has stalled somewhat of late. In February, total US dairy exports to Mexico contracted 10% in terms of milk solids equivalent, but jumped 28% in value. While the government remains optimistic about milk production in 2022, Mexico’s main dairy trade association has pushed back on official statistics and expects production to fall 3.3% this year. This tighter domestic environment for milk is supporting US imports into the country and is expected to continue into 2022. However, a strong dollar could further temper demand.
Exports aided by CWT
The National Dairy Farmers Federation (NMPF) has updated export contracts assisted by the Cooperatives Working Together (CWT) program. The March 2022 sales contracts covered 6.7 million pounds of American-style cheese, 37,000 pounds of butter, 611,000 million pounds of whole milk powder and 895,000 pounds of cream cheese.
In the first three months of the year, contracts total 36.5 million pounds of American-style cheese, 37,000 pounds of butter, 14.7 million pounds of whole milk powder and 4 million pounds of cheese cream, for a total milk equivalent for the year of 477 million pounds (on a milk fat basis). CWT estimates are based on uncompleted delivery contracts on export volumes.
Here is an overview of other export trends followed by Progressive dairy products:
Hay exports rebound somewhat
After falling to a 12-month low in January, alfalfa hay exports in February hit a four-month high of 232,170 MT. Most of the rebound was attributed to the two major markets, China and Japan, each up around 14,000 MT from the previous month. Exports to China in February 2022 totaled 123,614 MT, a three-month high and accounted for around 54% of the month’s total. With 62,768 MT, Japan was the second largest market and accounted for 26% of the US total for the month. Alfalfa hay exports were valued at around $399 a tonne, up $19 from January.
At 116,897 MT, February exports of other hay also rebounded slightly. Sales in Japan were estimated at 72,139 MT, or 62% of the US total for the month. Sales to South Korea at 24,881 MT hit a four-month high and accounted for 21% of total sales in February 2022. Other hay exports were valued at around $394 per ton, up $18 from to January.
According to Christy Mastin, sales representative at Eckenberg Farms, Mattawa, Washington, the outlook for US hay exports is improving, although logistical difficulties remain.
For more on hay exports and market conditions, see Progressive Forage Fodder Market Outlook update.
Exports of dairy heifers slow
After hitting a three-year high in 2021, the export of U.S. dairy heifers has gotten off to a slow start in 2022. Although February numbers were boosted by a large shipment to Pakistan, dairy heifer exporters warn that the outlook for the rest of the year became cloudy.
Total dairy heifer exports for the month were estimated at 2,619 head, down from just 195 head in January, based on USDA Foreign Ag Service (FAS) data. Almost all of February’s exports went to Pakistan with 2,584 head. The remaining 35 heads moved to Canada.
In the first two months of the year, FAS reported U.S. dairy heifer exports at just 2,814 head, the lowest two-month total since 2016. Year-to-date exports to Canada and Mexico are only 81 and 134 head, respectively.
Exporters cite tight heifer supplies, higher prices and transportation costs, and geopolitical unrest for the possible slowdown this year.
Read: Dairy heifer exports slow and head for a tough year.
Other business news
Here is a summary of other issues concerning and affecting the US dairy and agricultural trade:
- Several members of the U.S. House of Representatives sent a bipartisan letter to U.S. Trade Representative Katherine Tai and U.S. Agriculture Secretary Tom Vilsack calling on the Biden administration to reject Canada’s recent dairy proposals under the of the United States-Mexico-Canada Agreement (USMCA). Canada had proposed changes to its tariff-rate-quota (TRQ) allocations for dairy products after a USMCA panel found that existing rules failed to meet trade agreement requirements. Read: Panel sides with US in Canadian dairy trade dispute and Weekly Digest: US dairy groups reject USMCA’s Canadian dairy market access proposal.
- Testifying before a House Agriculture Subcommittee hearing on Livestock and Foreign Agriculture, USDEC President and CEO Krysta Harden called on Congress and the Biden administration to support a number of specific policy proposals that will help increase US dairy exports. Harden presented a comprehensive trade roadmap to support U.S. dairy exports, focusing on both Farm Bill provisions and key trade policies that can complement Farm Bill. Excerpts from these written testimonies are available here.
- The NMPF and USDEC praised a bipartisan letter from 87 members of the U.S. House of Representatives that called on Tai and Vilsack, “to make agriculture a priority within the Indo- peaceful”.
- Jeff Lyon, managing director of FarmFirst Dairy Cooperative, called on the Biden administration to redouble efforts to expand export markets by prioritizing bilateral and multilateral trade deals.
- The USDA is partnering with the Northwest Seaport Alliance (NWSA) to improve access to a 49-acre “pop-up” site to accept dry or refrigerated agricultural containers for temporary storage at the NWSA in Seattle, Washington. The site is designed to reduce operational barriers and costs by improving loading operations at export terminals. The NWSA includes ocean freight operations from the Ports of Seattle and Tacoma and is the fourth largest container gateway in the United States. A similar pop-up site launched at the Port of Oakland on March 1.
- Port of Savannah container volume rose nearly 18% in February, extending year-over-year increases to 19 consecutive months. Given the steady increase in cargo volumes, Georgian ports will make major investments in expansion projects that will increase the Port of Savannah’s annual capacity from the current 6 million to 9.5 million 20ft equivalent containers ( TEUs) by 2025.