April U.S. dairy product export volumes topped year-ago levels for the 11th straight month, with gains in most product categories and to most major destinations, according to Alan Levitt, vice president of communications and market analysis at the U.S. Dairy Export Council (USDEC).
Exporters shipped 162,441 tons of milk powder, cheese, butterfat, whey and lactose, up 12 percent from last April. Overseas sales were valued at $461 million, up 23 percent.
Sales to Mexico were valued at $103 million in April, up 9 percent from last year. Among other top markets, sales to China and Southeast Asia improved, while shipments to Japan were the highest in 21 months.
Dairy trade outlook reduced
Although dairy exports have been growing, USDA reduced the fiscal year 2017 (Oct. 1, 2016-Sept. 30, 2017) forecast based on value. In the Outlook for U.S. Agricultural Trade, released in late May, USDA projected U.S. dairy product exports would hit $5.4 billion, down $100 million from the previous quarterly estimate. The forecast for dairy imports was also lowered by $100 million, to $3.4 billion.
U.S. dairy export sales declined in 2015 and 2016, ending a streak of five consecutive years of expansion, according to the latest Central Federal Milk Marketing Order administrator’s letter. The drop-off in export value was attributable to the weakest global dairy market in more than a decade combined with a strong U.S. dollar. After reaching an all-time high $7.2 billion in 2014, the year-over-year value of dairy exports decreased more than 25 percent in 2015, and were down approximately 10 percent last year, falling to $4.8 billion.
Despite this decline, the 2016 value of dairy exports ranked sixth all-time and were greater than every year prior to 2011. The 2016 total was more than 28 percent greater than that of six years ago (2010), and was more than double the 2009 amount. In addition, 2016 dairy exports were more than four times greater than the value during 2000-2003 when they totaled a little over $1 billion per year.
Dairy replacement sales strong
A second straight month of strong dairy female replacement heifer sales to Vietnam pushed January-April 2017 exports to nearly equal sales for all of 2016.
A total of 3,170 dairy heifers were exported in April, with 2,112 finding a home in Vietnam. Mexico was the destination for another 572 heifers in April, followed by Canada, with 486. The April sales value topped $6.2 million for the fourth consecutive month.
Year-to-date 2017 dairy heifer exports total 12,035 head, compared to 12,216 for all of last year.
Foreign sales of U.S. dairy embryos totaled 693 in April, the highest monthly total of the year. The embryos were valued at a total of $522,000. China, the United Kingdom and Brazil were leading buyers.
China’s focus on genetic improvement of its dairy herd, along with stricter enforcement of environmental laws, is changing the country’s dairy farm structure, according to an annual summary from the USDA Foreign Ag Service Global Agricultural Information Network (GAIN). Small farms continue to withdraw from the dairy industry while farms with at least 100 head of dairy cattle are increasing. For the first time, these larger farms will account for over half of the cattle inventory in China.
In 2017, China’s dairy herd size is expected to decline by 500,000 head, to about 7.5 million head.
However, despite this reduction, the production gains realized from consolidation will largely offset production losses. Producers have mainly targeted culling lower-producing dairy cows. The current large young calf herd, with improved genetics, gives China an increased production potential in the future.
Hay exports
April exports of alfalfa hay nearly equaled the record-setting total in March. U.S. alfalfa hay exports topped 268,700 metric tons (MT) for the month, the eleventh time sales volumes topped 200,000 MT in the past calendar year. The alfalfa exports were valued at about $75.8 million. China was the leading foreign market for alfalfa hay during the month, at about 122,600 MT.
April 2017 sales of other hay totaled just over 128,875 MT, with Japan and South Korea combining to purchase about 109,500 million MT. The other hay exports were valued at about $39.1 million.
April exports of alfalfa cubes and meal were mixed.
U.S. ag trade surplus shrinks
Despite strong dairy, heifer and hay sales, April 2017 U.S. ag exports were valued at $10.8 billion, the lowest total since last July. Monthly U.S. ag imports were valued at $10.3 billion. As a result, April’s U.S. ag trade surplus was $483 million, the smallest margin since May 2016.
Fiscal year 2017 agricultural exports are projected at $137 billion, up $1 billion from the February forecast, as increases are expected in livestock, grain/feed, and cotton exports. U.S. agricultural imports in fiscal year 2017 are forecast at $114.5 billion, unchanged from February and $1.4 billion above their total value in fiscal year 2016. The U.S. agricultural trade surplus is expected to increase $1 billion to $22.5 billion. 
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Dave Natzke
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