September 7, 2018

US dairy exports record at more than 1.14 million tonnes

The US Dairy Export Council (USDEC) announced that in the first half of 2018, US dairy exports, including milk powders, cheese, butterfat, whey and lactose, reached more than 1.14 million tonnes, which is a record high and a 20% rise from the same period in 2017.

US suppliers achieved this milestone by building market share and competing for business against European and Oceania suppliers, Alan Levitt, USDEC vice president of communications and market analysis and Marc Beck, USDEC executive vice president of strategy and insights, explained.

They shared that US suppliers increased their share of global exports of major commodities from 17% in 2017 to almost 19% in the first half of 2018. Additionally, overall global import demand was good early in 2018, due to strong economic growth in dairy importing countries.

World trade of milk powder, cheese, butterfat and whey was up 7% in the first four months of the year before slowing down in May and June, before finishing at 3% higher.

Levitt and Beck stated, "Lower global prices in the first quarter of 2018 (compared with the second half of 2017), helped bring buyers back into the market, particularly to support supply chain pipelines for milk powder and whey."

Official data concluded that major global import growth demand came mainly from the Middle East and North Africa (MENA) region and Southeast Asia, not including the economic slowdown in China.

Another determining factor to help spur demand growth of 7% in the primary US export products was US' relatively reasonable pricing.

"In the first half of 2018, U.S. benchmark prices for cheese, skim milk powder and whey were competitive to those of New Zealand and the European Union. In addition, overseas markets often offered U.S. suppliers better returns than the domestic market," they shared.

USDEC noted that US dairy exporters clinched a share of exports to Southeast Asia from EU suppliers, in both SMP and whey products, as well as cheese exports to South Korea, lactose to China and SMP to Mexico. The US was also able to export SMP products to China.

"U.S. exporters are gaining growing recognition as both competitive and committed suppliers in new and growing markets – demonstrating a long-term commitment to servicing their customers and providing the right product, the right package and the right specs to meet individual market/buyer needs," Levitt and Beck said.

However, USDEC reported decreasing US domestic sales, which resulted in continued inventory build-up, especially for cheese. As such, US suppliers need to maintain and continue to build overseas sales to support milk values, they analysed.

Moving forward, US suppliers will potentially face a slower global dairy trade surrounding trade and tariff disputes between China and the broader implications.

"With the market environment expected to be less favourable in the months ahead, U.S. suppliers will have to work that much harder to build on first-half gains, particularly with an aim to build broader geographic diversification of our export destinations," Levitt and Beck concluded.