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U.S. dairy exports slumped in November, falling below the strong volumes of the prior year. Shipments were lower across all major product categories, with declines across most of Asia.
Retaliatory tariffs from China and Mexico took a toll:
• In the five months since retaliatory tariffs were put in place (July-November), U.S. exports to China were off 34 percent overall, with whey sales down 36 percent and sales of cheese and milk powder dwindling to negligible volumes.
• In Mexico, U.S. cheese export volume grew 2 percent in the first half of 2018 (compared to January-June 2017), but fell 4 percent July-November after the implementation of retaliatory tariffs.
With one month of data yet to be reported, 2018 U.S. exports were still on pace for a single-year record, despite the tariffs. But slower second-half performance eroded first-half gains.
November shipments equaled 13.9 percent of U.S. milk solids production, bringing year-to-date 2018 exports to 16.1 percent of U.S. milk solids production. The annual average over the previous five years was 14.7 percent. The record 15.4 percent for a calendar year was set in 2013.
Suppliers shipped 157,146 tons of milk powders, cheese, butterfat, whey products, and lactose in November, the lowest figure in 14 months, and down 12 percent from November 2017. Total U.S. exports were worth $442.2 million, 7 percent below the prior year. In the first 11 months of 2018, dairy exports totaled $5.16 billion, 3 percent more than the same period in 2017, while overall volume was up 12 percent.
On a value basis, sales to China were down 32 percent in November. Meanwhile, exports to Southeast Asia were down 8 percent in November, reversing a nine-month trend of increases. Exports to South Korea were down 13 percent in November after four months of gains. Exports to Japan were down for the seventh straight month, falling 28 percent below prior-year levels.
Instead, U.S. suppliers continued to focus on the Americas, where sales to Mexico were up 8 percent in November, year over year; exports to Canada were up 12 percent; and exports to South America were up 6 percent.
U.S. exports of NDM/SMP totaled 48,028 tons in November, a 13 percent decline vs. the year before. This was the lowest figure in 10 months (daily-average basis). Shipments to Mexico (28,317 tons, +13 percent) remained good in November, but exports to Southeast Asia (a 14-month low of 12,524 tons) were down 22 percent, driven by lighter sales to the Philippines and Vietnam. Volumes to Pakistan (-72 percent), the MENA region (-91 percent) and China (-64 percent) were significantly lower as well.
(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 November were just 41,278 tons, down 18 percent from the previous year. Dry whey, whey protein concentrate (WPC) and modified whey (permeate) were markedly lower, though shipments of whey protein isolate (WPI) were the most in 3 ½ years. Total whey exports to China in November were just 14,310 tons (-37 percent). For the fourth straight month most of the decline came from lower sales of modified whey. U.S. suppliers also saw lighter whey sales to South Korea, Japan, Canada and Southeast Asia.
Cheese exports (26,491 tons) were 10 percent below November 2017, falling short in most major U.S. markets. Shipments to South Korea (-24 percent) were the lowest in nearly three years, and exports to Australia were 45 percent below November 2017. Exports to Mexico (-7 percent), Japan (-13 percent), the MENA region (-20 percent) and China (-25 percent) were lower as well. In contrast, shipments to Central America were a record-high 2,424 tons, up 43 percent.
Lactose exports totaled 25,683 tons in November, the lowest figure in 18 months. Shipments to Mexico were off 30 percent, and sales to Japan and China were the lowest of the year.
Butterfat exports totaled 4,431 tons (+24 percent). As has been the trend in recent months, most of the sales went to Mexico. Shipments to the MENA region were down 90 percent.
Exports of WMP continued to track higher in November, led by expansion in Southeast Asia (mostly Vietnam). Total shipments of 3,637 tons were up 33 percent from the prior year.
Exports of MPC also trended higher in November. Shipments of 2,935 tons were more than double year-ago levels. Sales to Mexico were the most in nearly a decade.
Shipments of fluid milk and cream were up 4 percent. Higher sales to Canada were offset by lower shipments to Mexico.
Exports of food preps (blends) continue to lag year-ago levels. November shipments were 4,663 tons, down 24 percent from the year before.