Increased U.S. processing capacity, a prolonged period of price competitiveness and growth in demand from the largest U.S. markets are all contributing to a boom in U.S. cheese exports, according to the U.S. Dairy Export Council (USDEC).
Despite limited milk supply growth, U.S. dairy exports set new monthly records in volume and value in May 2022, based on data summarized in the most recent U.S. Dairy Exporter Blog. (Read: U.S. dairy export value surpassed $900 million in May as cheese volume soared.)
Some headwinds are developing that could challenge the U.S. in maintaining this booming cheese export pace, according to USDEC. The cheese price advantage the U.S. held over New Zealand has waned. Combined with a strong U.S. dollar, international purchasing could slow due to inflation or fears of a recession, reducing cheese consumption.
Despite pricing headwinds, the underlying fundamentals for significant growth in U.S. cheese exports remain, with substantial opportunity for the U.S. to increase its market share, supported by prolonged declines in European and Oceania milk production and strong demand for cheese in Mexico and Central America.
CWT-assisted exports
The National Milk Producers Federation (NMPF) updated Cooperatives Working Together (CWT) program-assisted export contracts. June 2022 sales contracts covered 5.6 million pounds of American-type cheeses, 254,000 pounds of butter and 600,000 pounds of cream cheese. The products, contracted for shipment between June 2022 and January 2023, are equivalent to 62 million pounds of milk (milkfat basis).
Through the first six months of the year, contracts total 53.4 million pounds of American-type cheese, 348,000 pounds of butter, 28.5 million pounds of whole milk powder and 5.6 million pounds of cream cheese, for a total milk equivalent for the year of 754 million pounds (milkfat basis). CWT estimates are based on contracts for delivery, not completed export volumes.
Here’s a look at other export trends followed by Progressive Dairy:
Dairy heifer exports hit six-year low
May shipments of U.S. dairy replacement heifers fell to 216 head; all were exported to Canada. Year-to-date exports total 3,386 head, the lowest for that period since 2016. Even more dramatic, the March-May 2022 total of just 572 head is the lowest three-month total dating back to January-March 2009.
Tony Clayton, Clayton Agri-Marketing Inc., Jefferson City, Missouri, expects little change in the dairy heifer export picture in the near term, with some hope the trend could change in the fourth quarter of the year. Availability of large groups of U.S. heifers are limited as use of beef semen on dairy females remains high. Northern Africa buyers have turned to Europe to source dairy replacements, he said.
Exports of dairy embryos were up slightly in May at 904, with China (500) and Tanzania (200) the leading markets. For the January-May period, dairy embryo exports total 4,082 head, the highest five-month total to start the year in the past five years.
Hay exports steady and strong
At 240,606 metric tons (MT) in May, monthly alfalfa hay exports were the second highest since last October and the second highest of the year, rebounding slightly from April. China remained the leading market at 120,795 MT, a three-month high and about 50% of the month’s total. Exports to Japan fell to a four-month low at 51,954 MT, representing 22% of the month’s total. Alfalfa hay exports were valued at about $387 per ton, down about $12 from April.
At 129,166 MT, May exports of other hay dipped from April, with all of the decline coming in reduced sales to Japan, where shipments totaled 72,233 MT, 56% of the total. Sales to South Korea at 35,909 MT were the highest in 24 months and represented 28% of the month’s total. Other hay exports were valued at about $399 per MT, unchanged from April.
Export customer visits have picked up, said Christy Mastin, sales representative with Eckenberg Farms, Mattawa, Washington. New-crop pricing is very high, a shock to customers in Japan and South Korea. China has held the exchange rate and is aggressively purchasing alfalfa.
Past shipping delays mean large volumes of hay are arriving at foreign buyers’ warehouses all at one time, Mastin said, and customers are asking for lower prices to move the product out to end users. The storage of hay by keeping it in the shipping containers is becoming more expensive as shipping lines are reducing the amount of free time allowed.
Pacific Northwest timothy harvest was mostly finished with good weather contributing to high quality. However, due to high prices, customers are seeking lower-quality timothy – which is in limited supply – at lower prices.
The volume of second-cutting alfalfa looks to be smaller, with most reports from the Southwest (Arizona, California and Utah) citing reduced volumes. That’s throwing out the old rule that first cutting is generally in most demand and highest priced, Mastin said.
For more on hay exports and market conditions, check out Progressive Forage’s Forage Market Insights update.
Other export news
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According to a USDEC report, innovative ingredient partnerships are helping open doors for exports of U.S. milk powder, whey permeate, milk and whey proteins, lactose and other dairy ingredients. Read: Global partnerships showcase the quality of U.S. dairy ingredients.
- Sheryl Meshke, co-president and CEO of Associated Milk Producers Inc. and a member of NMPF’s board of directors, told a Senate subcommittee that the U.S. government must pursue additional market access opportunities and address export supply-chain delays in order for the U.S. dairy industry to keep up with its global competitors.
“In pursuing exports, the U.S. dairy industry faces experienced and well-established competitors who have been exceptionally active with free trade agreements,” Meshke told the Senate Agriculture Committee’s subcommittee on Commodities, Risk Management and Trade on June 9. “The U.S. needs to get back in the game and craft an approach to pursuing comprehensive trade agreements.”
- International experts will share insights on issues facing the dairy industry during a Global Dairy Symposium, scheduled in conjunction with World Dairy Expo. The program will be held Oct. 6, 8:30 a.m.-noon (Central time) in the Alliant Energy Center, Madison, Wisconsin.
Speakers scheduled to participate include:
- Krysta Harden – CEO of the U.S. Dairy Export Council
- Torsten Hemme – president of International Farm Comparison Network (IFCN)
- Ad Van Velde – president of Global Dairy Farmers
- Sheryl Meshke – co-president and CEO of Associated Milk Producers Inc.
This event is available at no cost, but space is limited. Advance registration is required by Sept. 30. For more information or to register, email Jennifer Lu, economic development consultant, International Agribusiness Center.
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President Joe Biden signed the Ocean Shipping Reform Act into law, June 16, setting in motion a series of new rules and regulations regarding ocean carrier practices that the Federal Maritime Commission (FMC) must implement over the course of the next year. USDEC and NMPF called on the FMC to implement the rules as expeditiously as possible to support agricultural exporters in getting more products onto vessels to better address rising food security needs around the world.
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The USDA announced plans to increase capacity for exporting chilled and frozen agricultural commodities at the Port of Houston in Houston, Texas. The USDA will lease additional chassis, used to position and store refrigerated shipping containers while waiting for vessels to arrive.
- In addition, the USDA announced an expansion of its existing partnership with the Northwest Seaport Alliance (NWSA). The expansion will enhance access to a 16-acre “pop-up” site to accept either dry agricultural or refrigerated containers for temporary storage at NWSA in Tacoma, allowing the containers to be more quickly loaded on ships at the export terminals.
