Dairy ingredients were the recipe for export success in May
While record cheese exports pushed US exports to record highs in April, it was dairy ingredients that pushed May volumes to almost the same record high, according to a monthly update from the US Dairy Export Council ( USDEC). On a daily basis, May’s dairy exports were the second highest of any month on record.
Overall, an increase in skimmed milk powder / skimmed milk powder (NFDM / SMP) to Mexico and the Middle East / North Africa (MENA) and continued demand for whey in China were the main drivers. growth in ingredient exports. Port issues continued to frustrate U.S. dairy exporters in May, but as we’ve seen in recent months, U.S. exporters are finding ways to deal with delays at the port and cope with rising freight rates. and trucking.
Here is Progressive Dairy Monthly export recap and trade news covering dairy, dairy cattle, hay and more.
- Volume base: Compared to May 2020, the year-over-year growth in volume on a milk solids equivalent basis was 13%. At 88,729 metric tonnes (MT), NFDM / SMP shipments were the largest ever shipped in a single month. Even after the record month it looks like more sales have been made and waiting for a ship. In the first five months of the year, NFDM / SMP exports reached a record annual pace, supported by strong global demand and favorable US prices.
Cheese was the only US dairy export to decline in May. Total volume fell 13%, with the Asia-Pacific market experiencing the largest decline. Much of that drop can be attributed to historically low cheese prices last year, as the COVID-19 pandemic and food service closings hammered domestic demand for cheese in the United States. While the U.S. supply is booming this year thanks to new capacity, domestic demand has also increased as foodservice establishments replenished pipelines for waves of customers, which has also kept prices strong. On top of that, port issues likely delayed some export orders recorded in May.
Total U.S. whey exports in May increased 28%, driven by growth in higher-value products. No single market has been the engine of growth. Going forward, the continued reopening of economies and the associated refocus on health and wellness is expected to be a major boost to demand for higher value-added whey.
- Value base: Compared with a year earlier, the value of U.S. exports for May 2021 increased 18% to $ 690 million. In the first five months of the year, the value of U.S. dairy exports was estimated at around $ 3.13 billion, up 13% from the same period a year earlier.
CWT Assisted Exports
The National Federation of Milk Producers (NMPF) has updated the sales totals funded by the Cooperatives Working Together (CWT) program since the start of the year. Until the end of June, accepted bids on 2021 sales reached about 23 million pounds of American-style cheese, 11.1 million pounds of butter, 7.1 million pounds of anhydrous dairy fat, 17 million pounds pounds of whole milk powder and 7.3 million pounds of cream cheese. These sales are the equivalent of approximately 836 million pounds of milk on a milk fat basis.
Hay exports remain strong
May 2021 alfalfa hay exports totaled 253,804 metric tonnes (MT), up slightly from April and contributing to the highest three-month total since March-May 2020. Shipments were valued at around 339 $ per MT, down $ 6 from April.
At 131,373 MT, China bought about 52% of the monthly total. May alfalfa hay exports to the second market, Japan, were about equal to April at 59,035 MT, accounting for about 23% of the total.
Although still strong, May exports of other hay were down from April at 136,738 MT. Exports of other hay were valued at around $ 348.50 per tonne, down $ 1 from April. Around 61% (83,515 MT) of the month’s sales went to Japan, down around 9,000 MT from April. Shipments to another major customer, South Korea, were flat with a month earlier at 29,661 MT, accounting for around 22% of the total.
To learn more about hay exports and market conditions, see Progressive forages Overview of the forage market update.
Dairy heifer exports down
Exports of dairy replacement heifers remained weak in May at 462 head. Together with May sales, year-to-date exports totaled around 8,359 head, the second lowest total for that five-month period since 2017.
Most heifer sales still stayed close to home in May: 206 moved to Mexico and 133 moved to Canada. Other sales and destinations included 77 head to Thailand and 46 head to Pakistan.
On average, exported heifers were valued at about $ 1,755 per head, down about $ 150 per head from April. May sales in Mexico were lower, averaging $ 1,476 per head, while those sold in Canada averaged $ 2,103 per head. Elsewhere, the average was about $ 1,845 per head.
According to Gerardo Quaassdorff, TK Exports Inc., Boston, Virginia, the business environment in the cattle export market is unheard of before.
The good news is that inquiries from China, Pakistan and Vietnam are increasing. The bad news is that lines of credit and / or other funding in these countries are still slow or nonexistent, with uncertainty surrounding currency volatility. Additionally, buyers from these countries used to buy cheap heifers from Australia and New Zealand and are looking for discounted prices for heifers sourced from the United States.
Cattle exporters, on the other hand, cannot extend their price offers for more than a month due to volatile transportation costs. Cargo planes are used for more lucrative and certain COVID-19 related shipments.
Exporting dairy heifers has also become a longer process requiring more planning, Quaassdorff said.
To supply open heifers, exporters should ask importers to commit funds well in advance to purchase heifers earlier and cover the cost of raising them to breeding age. The supply of breeding heifers is even more tedious and can be unprofitable as exporters must ensure that these heifers are not bred to beef bulls.
The main competition for the Chinese dairy, beef and feeder cattle markets comes from Uruguay. Suppliers in Ireland, the Czech Republic and Russia export cattle trucks to Central Asia.
Other business news
- Southeast Asia, with a growing population and growing middle class, remains the biggest growth opportunity for U.S. dairy exporters, according to a new report from CoBank. However, to match the abundant supply of milk in the United States with the growing demand in Southeast Asia, American processors will need to invest in manufacturing technology to meet the product needs of an ethnically and ethnically-based consumer base. economically diversified. Rapid urbanization in Southeast Asia has increased per capita incomes and will lead to increased protein consumption as consumers seek healthier foods and drinks, said Tanner Ehmke, chief dairy economist at CoBank. Read the report: US dairy processors must be versatile to compete in Southeast Asia.
- To promote further expansion of US dairy exports, The NMPF and USDEC have called on the Biden administration to seek the renewal of the Presidential Trade Promotion Authority (TPA), which expired on July 1. The call for renewal comes on the first anniversary of the United States-Mexico-Canada (USMCA) agreement, promulgated with the help of TPA.