Market CommentaryBack to all Market Commentary
U.S. dairy exports tracked higher than year-ago levels in the third quarter, despite continued setbacks in markets where tariffs have come into play.
Suppliers shipped 167,122 tons of milk powders, cheese, butterfat, whey products, and lactose in September, up 8 percent from September 2017. Total U.S. exports were worth $435.2 million, 4 percent above a year ago. In the first three quarters of 2018, dairy exports totaled $4.25 billion, 4 percent more than the same period in 2017, while overall volume was up 16 percent.
U.S. exporters were aggressive in selling milk powder to Mexico and Southeast Asia.
Exports of nonfat dry milk/skim milk powder (NDM/SMP) totaled 52,745 tons, a 30 percent increase vs. a year ago. Shipments to Mexico (29,976 tons, +40 percent) remained heavy, while sales to Southeast Asia (15,743 tons, mostly Philippines and Indonesia) more than doubled. This year, U.S. suppliers have exported more than two-thirds of the NDM/SMP they've produced. Over the previous five years, 56 percent of production was sold overseas. Meanwhile, sales to China, Peru, Pakistan and the Middle East/North Africa (MENA) region were negligible, down more than 4,600 tons between them compared with a year ago.
U.S. suppliers also moved record volumes of whole milk powder (WMP) to Southeast Asia. Total September exports were 6,655 tons (+164 percent), the most in more than eight years. Nearly all went to Vietnam and Singapore. In contrast, sales to China were just 40 tons, a fraction of what was shipped last 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 September were 41,053 tons, down 6 percent from a year ago, with a significant drop-off in sales to China, where newly implemented tariffs are having an impact. In the first half of the year, China accounted for 42 percent of U.S. whey exports. But third-quarter shipments to China accounted for just 31 percent of total U.S. whey exports. Exports to China in September were just 10,961 tons (-38 percent), the worst month since January 2016. For the second straight month most of the decline came from lower sales of modified whey (permeate), which hit an eight-year low. Once again, suppliers diverted whey sales to Southeast Asia, where volumes were up 37 percent.
Cheese exports drifted lower in the third quarter. September volume was 24,569 tons (-9 percent), a 20-month low. Cheese shipments to Mexico (5,952 tons, -10 percent) were lower for the third straight month. U.S. suppliers also saw slower sales to Australia (-36 percent), China (-63 percent), Japan (-22 percent) and the MENA region (-35 percent). The only notable gains were posted in sales to Southeast Asia (+99 percent) and South Korea (+18 percent).
Lactose exports totaled 31,152 tons in September, 1 percent greater than levels posted in September 2017. Shipments to China (7,411 tons) were up 51 percent and exports to Southeast Asia (7,668 tons) were up 25 percent, while sales to Japan were a five-year high. This was offset by drops in sales to Mexico and New Zealand.
Butterfat exports totaled 3,702 tons, up 168 percent from the year before, led by increased sales to Mexico (1,686 tons, up more than seven-fold) and Canada (1,245 tons, more than double).
Exports of MPC continued to track higher in September. Shipments of 3,166 tons were the most in more than three years, nearly double last year's total. Sales to Mexico were the most in nearly a decade.
Shipments of fluid milk and cream were up 12 percent. For the fourth straight month, Taiwan (3.9 million liters, +39 percent) was the largest U.S. customer.
Exports of food preps (blends) continue to lag year-ago levels. September shipments were just 4,080 tons, down 37 percent from a year ago.
On a value basis, sales to Southeast Asia were up 83 percent from last year's depressed level. Volume of milk powder, whey, lactose and cheese was nearly twice the September 2017 total. Sales (by value) to Mexico were up 15 percent, while exports to most other top markets were below year-ago levels.