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U.S. Exports Higher Ahead of Covid-19 Distruptions

USDEC staff

Despite early indications of shipping disruptions resulting from the coronavirus outbreak, U.S. export volumes tracked above year-earlier levels in February. It's the sixth straight month of positive growth, but with the break in global demand in March, volumes are likely to be lower in the months ahead.

For February, U.S. suppliers shipped 170,556 tons of milk powders, cheese, whey products, lactose and butterfat during the month, 3% more than the year before. The value of all exports was $529.0 million, up 9% (all percent changes adjusted for leap day).  

Whey volumes continued to improve, posting a 17% gain. Volume of 39,786 tons was the highest in eight months (on a 30-day basis). Shipments of whey protein isolate were 5,200 tons, up 51% and the most ever (30-day month). In addition, suppliers realized gains in dry whey (+22%) and whey protein concentrate (+26%).  

Whey exports to China picked up for the second straight month. January-February volume was up 24% vs. a year ago. Whey shipments to Southeast Asia (+16%) also have been strong this year.  

Meanwhile, total cheese exports were 30,913 tons, the most in nine months, though 8% below last year's level. Shipments to Mexico were a 20-month high of 9,610 tons, up 19%, while sales to Southeast Asia (led by Indonesia) were 2,950 tons, the most ever. In contrast, sales to South Korea (-32%), Japan (-34%) and Australia (-32%) failed to match the strong levels of a year ago.  

A weakening Mexican economy, reflected in a significantly depreciated peso, led to a slowdown in Mexican purchases of dairy ingredients. Nonfat dry milk/skim milk powder (NDM/SMP) took the biggest hit, falling 28% to 19,909 tons, and whey imports were down 30% to 3,984 tons.  

Overall shipments of milk powder, cheese, butterfat and whey to Mexico were down 18%, to the lowest level since September 2017. In addition, shipments of fluid milk and cream were down 30% to the lowest in almost four years.   In all, NDM/SMP exports were 54,464 tons, down 5%, as increased sales to Southeast Asia (+10%) and the Middle East/North Africa (MENA) region (+414%) couldn't offset the declines in Mexico. This was a step down from the previous five months, when shipments averaged more than 68,000 tons/month.  

Lactose exports were 31,327 tons, up 12% from the reduced levels of early 2019. Gains were led by Southeast Asia, up 21%.   Shipments of milk protein concentrate were 3,885 tons, up 30% and the best month in almost five years. Suppliers earned new sales to North Africa (1,620 tons, more than triple last year).  

Butterfat sales continue to lag. In the first two months of the year, shipments totaled just 3,569 tons, the lowest figure since 2007.   On a value basis, in addition to higher sales to Southeast Asia, suppliers posted record value of shipments to the Caribbean, led by robust sales of NDM/SMP and cheese to the Dominican Republic. In addition, the value of sales to the MENA region (led by Egypt) were the most since May 2015.  

On a total milk solids basis, U.S. exports were equivalent to 14.6% of U.S. milk solids production in February. In the first two months of the year, exports were 14.8% of production.