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Lost sales to China due to retaliatory tariffs and African swine fever, plus strong competition elsewhere from European and New Zealand suppliers, resulted in lower U.S. export volume in the first half of 2019. Shipments of milk powders, cheese, butterfat, whey products and lactose were 1.0 million tons, down 14% from last year's record pace. Exports of these major products to China were down 54%, while sales to other markets were up 5%.
Overall value of U.S. dairy exports reached $2.95 billion in the first half, up for the third straight year. Suppliers saw notable gains in sales value to Mexico, Southeast Asia, South Korea, Canada and South America, offsetting a large decline in sales to China. Bright spots for the first half of the year included increased cheese exports; record whey and lactose sales to Southeast Asia; and record fluid milk/cream shipments.
Cheese exports in the first half of 2019 were 193,169 tons, up 4% from a year ago, and the most since 2014. U.S. suppliers posted record volumes to South Korea (+26%), Southeast Asia (+16%) and Central America (+28%), plus increased sales to the Middle East/North Africa (MENA) region (+16%). This offset declines in shipments to Mexico (-15%) and China (-46%).
Exports of nonfat dry milk/skim milk powder (NDM/SMP) failed to match last year's record pace. First-half volume was 327,755 tons, down 15%. Volume was lower in all major markets, including top customers Mexico (-5%) and Southeast Asia (-10%). The United States lost share to European suppliers, who were aggressive in moving powder that had been liquidated from government stocks, and New Zealand exporters, who sought to clear production from a record flush in 2018/19.
(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.)
Overall whey exports were 225,627 tons in the first six months of 2019, down 25%. This is the lowest figure since 2011, and attributable almost entirely to reduced demand from China. In addition to tariffs that have made U.S. whey less competitive, African swine fever has led to massive hog culling, reducing the need for feed-use dry whey and whey permeate. Total whey exports to China were down 58% in the first half, a loss of more than 12,000 tons per month. Suppliers partially compensated with increased whey sales to Southeast Asia (+5%, to a new record volume) and Mexico (+12%). Dry whey exports in the first half were just 81,994 tons, down 33% and the lowest since 2004. Most of the decline came from China, but suppliers also saw sales reductions from Japan (-50%) and Southeast Asia (-15%).
Exports of whey protein concentrate (WPC) have increased as the year has progressed, but total volumes still trail last year by a third. China made up virtually all the shortfall, while other markets mostly matched or exceeded last year, including record sales to Mexico (+14%).
Shipments of modified whey (permeate) were the lowest first-half volume since 2012, falling 10% below last year's pace. Suppliers were able to offset some of the lost sales to China with record exports to New Zealand (+154%) and Southeast Asia (+60%).
Whey protein isolate (WPI) volumes were up 9% in the first half, coming in just shy of the record 2015 pace. Volumes to Southeast Asia (+38%) and South Korea (+43%) were the most ever, and sales to Canada, the EU and even China also were above year-ago levels.
Lactose exports were 186,977 tons in the first half, down 11% from last year's record pace, but still the second most ever. Sales to China were off 33%, and volumes to Japan (-13%) and New Zealand (-9%) were down as well. However, exports to Southeast Asia (+9%) were the most ever.
Exports of fluid milk/cream were up 16%, led by record volumes to Taiwan (our largest customer, up 32%) and Mexico (+8%), plus increased sales to Canada (+46%).
Shipments of milk protein concentrate (MPC) were higher for the third straight year, up 17% year-to-date. The majority of the gains came from a nearly four-fold increase in sales to Canada.
Exports of butterfat and whole milk powder (WMP) were each down more than 30% in the first half. Strong domestic use has made less butter available for export, while suppliers lost a key WMP market in China (-94%)
Sales of food preps (blends) were down 19% in the first half, with the lowest volume in 17 years. Most U.S. sales go to Canada, where volume was down 10%.
On a total milk solids basis, U.S. exports were equivalent to 14.1% of U.S. milk solids production in the first half of 2019. Over the previous five years, exports have averaged 14.7% of production.