While uncertainty remains regarding Trump administration trade policies and a border battle with Canada appears to be escalating, a strong second-half finish improved the U.S. dairy exports picture and pushed 2016 dairy ingredient exports to a record level, according to Alan Levitt, with the U.S. Dairy Export Council (USDEC).
Both the volume (167,373 tons) and value ($443 million) of December 2016 dairy exports were up 15 percent from a year ago, with gains across most product categories. December whey exports remain particularly strong, led by record sales to China. Monthly cheese exports totals were the highest since May 2015.
After a slow start to the year, fourth-quarter exports were up 19 percent compared to a year earlier. For the year, U.S. dairy exporters shipped 1.89 million tons of milk powders, whey products, lactose, cheese and butterfat, up 3 percent from 2015’s level.
On a total milk solids basis, U.S. exports were equivalent to 14.5 percent of U.S. milk production in December, bringing the full-year proportion to 14.2 percent (Table 1). Imports were equivalent to 4.1 percent of production during the month.
However, with lower prices, export values totaled $4.70 billion, down 10 percent from 2015 and the lowest figure since 2010.
Mexico remains the largest export market for U.S. dairy products, with 2016 trade of $1.22 billion.
Record-high 2016 U.S. fluid and cream exports also reflected a surge in shipments to Canada, with fourth-quarter milk/cream exports north of the border nearly triple year-ago levels. Canada also was responsible for more than two-thirds of U.S. butter exports in the fourth quarter.
Despite those numbers, the U.S. dairy industry continued its push back against what it calls Canada's protectionist dairy trade policies, this time turning its attention to the state level.
In late January, a group of 17 dairy companies representing dairy farmers and processors asked 25 state governors to urge Canadian policymakers to uphold existing trade commitments with the U.S. Letters were sent to governors in states with significant numbers of dairy farms and dairy processing companies. At issue is implementation of a Canadian national strategy that U.S. dairy leaders said would unfairly subsidize Canadian dairy products and flood global markets with excess milk powder.
"In the current trade climate across North America, it is foolhardy for Canada to continue provoking the United States with a course of action that so blatantly violates our trade agreements," said Jim Mulhern, president and CEO of the National Milk Producers Federation (NMPF). "We need our nation's governors to join in our call for Canada to step back from the brink of what it is about to do and take steps to remind Canada how critical trade is to its own interests, as well."
Previously, U.S. dairy organizations and state departments of agriculture sent a similar letter to President Donald Trump, charging that Canada's protectionist policies were in direct violation of trade commitments under the North American Free Trade Agreement (NAFTA) and the World Trade Organization (WTO).
Dairy replacement cattle sales close 2016 stronger
U.S. dairy cattle exports moved 4,771 replacement heifers offshore in the final two months of 2016, but that wasn’t enough to avert the weakest export year since 2007.
About 12,216 dairy heifers were exported in 2016, just 17 percent of the record-high total of 73,442 head exported in 2011. The 2016 exports were valued at $23.7 million. U.S. NAFTA partners were the biggest customers last year. Mexico purchased more than two-thirds of the 2016 total, at 8,226 head, with Canada a destination for 3,161 head.
Despite the weak year, replacement heifer export numbers and interest are gaining strength. Gerardo Quaassdorff, DVM, sales and management consultant with TK Exports Inc., TKE Agri-Tech Services Inc., Boston, Virginia, said there is a growing interest in U.S. dairy replacement heifers by some emerging countries. There’s also greater interest from buyers in Mexico and Canada, seeking to replenish dairy herds and assure domestic milk supplies in preparation for potential renegotiation of NAFTA.
Canada’s demand for short-bred heifers is helping support dairy heifer prices in U.S. states along the Canadian-U.S. border.
U.S. exports of dairy embryos also finished the year stronger. Exports totaled 1,164 embryos in December, bringing the 2016 total to 9,561. China was the leading market during the year, with 3,595 embryos, followed by Japan, with 2,378. Embryo exports in 2016 were valued at $10.3 million.
Alfalfa exports a record
At 2.49 million metric tons (MT), U.S. alfalfa hay exports set a record high in 2016. December exports totaled 243,529 MT, the second-highest monthly volume of the year. China was the leading foreign market for alfalfa hay, at 1.09 million MT. The next four markets (Japan, Saudi Arabia, United Arab Emirates and South Korea) combined to purchase 1.26 million MT.
In contrast, exports of other hay finished the year at 1.47 million MT, the lowest annual total in more than a decade. Japan and South Korea were the leading markets, combining to purchase about 1.17 million MT.
Exports of dehydrated alfalfa meal were the highest since 2008, while foreign sales of dehydrated alfalfa cubes were the highest since 2010.
U.S. ag trade surplus balance in 2016
Thanks to positive dairy numbers, U.S. agriculture continued to run counter to an otherwise negative overall trade balance in 2016.
U.S. ag exports were valued at $134.9 billion in 2016, up slightly from $133.1 billion in 2015. U.S. ag imports were valued at $114.6 billion, up less than $1 billion from a year earlier. As a result, the U.S. ag trade surplus was $20.3 billion for the year, up from $19.4 billion in 2015.
The December 2016 U.S. agricultural trade balance posted its third-largest monthly surplus since November 2014.
Monthly ag exports were valued at $12.9 billion; imports were valued at $9.7 billion, resulting in a U.S. ag trade surplus of more than $3.19 billion.
- Progressive Dairyman
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