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U.S. dairy exports flat in October

Alan Levitt

U.S. dairy exports were virtually flat on both a volume and value basis in October, undermined by a continued loss of sales to China since implementation of retaliatory tariffs. Shipments of milk powder, whey, lactose, cheese and butterfat to China were down 47% in October, while U.S. exports elsewhere were up 14%, with large gains in sales to Southeast Asia and Mexico.
In the four months since China put additional tariffs in place, U.S. whey exports to China were down 36% (-6,909 tons/month) compared with a year ago. SMP sales were down 54% (-1,333 tons/month), WMP sales were down 97% (-1,288 tons/month) and cheese exports were down 56% (-752 tons/month). On a value basis, total dairy exports to China were down 36% in the July-October period.  

Meanwhile, exports to Mexico and Southeast Asia were up 25% and 29%, respectively, in October (on a value basis) - mostly on the strength of improved sales of nonfat dry milk/skim milk powder (NDM/SMP).   U.S. exports of NDM/SMP totaled 60,672 tons in October, a 19% increase vs. a year ago. The 2018 total through 10 months - 617,096 tons - has already established a new annual high, with two months to go. Shipments to Mexico (32,734 tons, +37%) remained heavy in October, while sales to Southeast Asia (a six-month high of 20,401 tons, mostly Indonesia, Philippines and Malaysia) were up 39%. In contrast, sales to China, Peru, Pakistan, Japan and the Middle East/North Africa (MENA) region were negligible, down more than 5,800 tons between them compared with a year ago.  

U.S. suppliers also moved greater volumes of whole milk powder (WMP) to Southeast Asia. Total September exports were 4,227 tons (+124%) and nearly half went to Vietnam. In contrast, sales to China were just 38 tons, a fraction of what was shipped last year. U.S. WMP exports have doubled this 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 October were just 40,765 tons, down 19% from a year ago. All the sub-categories of whey were markedly lower. Exports to China in October were just 10,167 tons (-51%), the worst month since November 2015. For the third straight month most of the decline came from lower sales of modified whey (permeate). Once again, suppliers diverted whey sales to Southeast Asia, where volumes were up 19%, including record sales of modified whey (permeate). Sales to Japan and South Korea also were higher.  

Cheese exports (26,931 tons) were on par with a year ago in October. Cheese shipments to Mexico improved despite retaliatory tariffs, up 31% against a weak comparable. U.S. suppliers also saw slower sales to China (-59%), Japan (-26%) and Australia (-25%). The most notable gains were posted in sales to the MENA region (+36%) and Southeast Asia (+28%).  

Lactose exports totaled 29,070 tons in October, the lowest figure in 17 months (daily-average basis). Shipments to China were off 9%, following implementation of new tariffs in late September, while sales to Southeast Asia were down 18% and exports to New Zealand were an eight-year low. Sales to Japan, in contrast, were up 39%.  

Butterfat exports totaled 5,603 tons (+75%), the most in more than four years. Gains were led by record sales to Mexico (3,156 tons).  

Exports of MPC continued to track higher in October. Shipments of 3,362 tons were more than double year-ago levels. Sales to Mexico were the most in nearly a decade, and volumes to Canada and the MENA region were higher as well.   

Shipments of fluid milk and cream were up 18%. Sales to Canada and Mexico were the highest of the year.  

Exports of food preps (blends) continue to lag year-ago levels. September shipments were 6,318 tons, the highest figure of the year, but still down 19% from a year ago.  

Suppliers shipped 176,948 tons of milk powders, cheese, butterfat, whey products, and lactose in October, up 2% from October 2017. Total U.S. exports were worth $459.8 million, 1% below a year ago. In the first 10 months of 2018, dairy exports totaled $4.71 billion, 4% more than the same period in 2017, while overall volume was up 15%.  

On a total milk solids basis, U.S. exports were equivalent to 15.3% of U.S. milk production in October, bringing the year-to-date percentage to 16.3%.