After a surprisingly strong January, U.S. dairy exports came back down to earth in February, according to a monthly market update from the U.S. Dairy Export Council (USDEC).
Based on February data summarized in the most recent U.S. Dairy Exporter Blog, U.S. export value declined from the same month a year earlier for the first time in over two years, as lower dairy product prices and a higher proportion of lower-valued products pulled down the average unit value.
On a milk solids basis, U.S. dairy export volume gained just 0.8%, with the increase driven almost entirely by lactose and whey protein concentrate (WPC).
Export drivers, challenges
In general, weaker dairy product prices will likely result in depressed export value performance relative to volume in the year ahead, especially given the challenging environment for cheese and butter exports.
Strong competition from Europe and New Zealand, combined with weaker economic performance around the world, is creating a challenging environment for U.S. dairy, particularly in Asia. Latin American is providing significant support to U.S. dairy exports.
CWT-assisted exports
The National Milk Producers Federation (NMPF) said March 2023 Cooperatives Working Together (CWT) program-assisted export contracts covered 1.8 million pounds of American-type cheeses, 186,000 pounds of butter and 522,000 pounds of cream cheese. In milk equivalent, March contracts are equal to 24.1 million pounds of milk on a milkfat basis. These products will go to customers in Asia, Central America, the Caribbean and Middle East North Africa, and will be shipped from March through September 2023.
CWT-assisted member cooperative year-to-date export sales total 12.6 million pounds of American-type cheeses, 555,000 pounds of butter, 17.8 million pounds of whole milk powder and 2.5 million pounds of cream cheese. These sales are the equivalent of 278.3 million pounds of milk on a milkfat basis.
The amounts of dairy products and related milk volumes reflect current contracts for delivery, not completed export volumes. CWT pays export assistance to the bidders only when the export and delivery of the product are verified by the required documentation.
Other dairy export numbers
Separately, the Department of Commerce/Bureau of the Census estimated U.S. dairy exports through the first five months of fiscal year 2023 (October 2022-February 2023) at almost $3.7 billion, up 17% from the same period a year earlier. Fiscal year-to-date dairy imports were estimated at $2.73 billion, up 33%, with cheese imports up 11% at $677 million.
U.S. dairy heifer exports jump
The latest monthly export report from USDA’s Foreign Agricultural Service (FAS) estimated February sales of U.S. dairy replacement heifers to foreign buyers at 2,218 head, up 2,000 from January. February sales were supported by a shipment on 1,964 dairy heifers to Vietnam. Of the remainder, 134 moved to Canada and 120 relocated to Mexico.
At 115 head, February beef heifer exports remained low, with 74 sold to buyers in Canada.
Dairy embryo sales
Exports of dairy embryos also rebounded slightly in February but remained well behind last year’s record-high pace. At 1,035, February sales marked the second-lowest monthly total since September 2022. China remained the largest market for U.S. dairy embryos during the month at 845. Dairy embryo exports totaled 17,579 in 2022, surpassing the recent record high of 14,590 in 2020.
Hay exports rebound somewhat
While still historically low, February 2023 exports of most U.S. hay products rebounded slightly from January.
Exports of alfalfa hay in February were estimated at 162,968 metric tons (MT), up about 20,000 MT from January’s eight-year low. At 85,072 MT, February sales to China rose about 7,500 MT from January’s two-year low. China was the destination for about 52% of all U.S. alfalfa hay exports during the month. Sales to Japan totaled 27,700 MT, 17% of the month’s total and a three-month high.
February exports of alfalfa cubes (8,711 MT) and alfalfa meal (2,385 MT) were up from January.
Exports of other hay increased about 9,530 MT from January to 76,363 MT. The total is still well below monthly averages extending back two decades. Japan maintained its spot as the top market, taking about 64% of other hay shipments (49,017 MT) during the month, up more than 10,000 MT from January and a three-month high. Sales to South Korea were steady at 12,461 MT, 16% of the total.
For more on hay exports and market conditions, check out Progressive Forage’s Forage Market Insights update.
Ag trade balance: Positive
The U.S. ag trade balance turned slightly positive in February. The U.S. Department of Commerce/Census Bureau estimated the value of February agricultural exports at $15.26 billion and the value of ag imports at $15.21 billion, yielding a trade balance up $49 million for the month. The calendar year agricultural trade deficit is about $36 million through the first two months of 2023.
Other trade news
- U.S. Trade Representative Katherine Tai released the 2023 National Trade Estimate Report on Foreign Trade Barriers. The report provides a comprehensive review of significant foreign barriers to U.S. exports of goods and services.
