Despite climbing U.S. cheese shipments in March, U.S. dairy exports fell into the red with a 7% slip from a strong year-over-year performance in February. Here’s Progressive Dairy’s 30,000-foot view at dairy-related export categories.
Mexico proves to be reliable cheese customer
March’s U.S. dairy export performance could not keep up with the strong markets of February, falling 7% compared to March 2023. Additionally, total milk solids equivalent exports were down 3.1% in the first quarter of 2024 for a grim 10% decline in U.S. export value compared to the year prior at just over $2 billion.
However, much like February, cheese sales surged. U.S. cheese shipments jumped 20% in March to 50,222 metric tons of product, becoming the first time product export volume surpassed 50,000 metric tons in a single month. Mexico continues to demand cheese product with shipments up 8%, adding to an unheard of 33-month streak of year-over-year gains for exports to that country. As noted in the U.S. Dairy Export Council’s monthly market update, “The country has grown into the United States’ most reliable cheese customer, as evidenced not only by recent-month sales gains but by the past few years.”
High-protein whey exports saw gains in March as well. Year-over-year shipments were up 32% across a spread of geographic regions, including the No. 1 market Japan at 61% (603 metric tons) after listless months.
Yet, declines in low-protein whey and nonfat dry milk/skim milk powder (NFDM/SMP) were enough to offset gains in other export categories. Shipments of low-protein whey fell 8% with demand from China waning, the ongoing cause for this plunge. U.S. NFDM/SMP shipments fell 18% (-14,335 metric tons) with two major markets diverging. Exports to Southeast Asia grew 13% in March with the same year-over-year growth recorded in the first quarter. Inversely, NFDM/SMP exports to Mexico fell 37% in March.
April brings year-to-date CWT-export assisted sales to 458.8 million pounds
In a report released April 22, National Milk Producers Federation (NMPF) stated Cooperatives Working Together (CWT) program-assisted member cooperative secured 38 contracts for 5.7 million pounds of American-type cheeses, 353,000 pounds of whole milk powder and 187,000 pounds of cream cheese – the equivalent of 6.2 million pounds of dairy product export sales. The products are going to customers in Asia, Central America, the Caribbean, Middle East-North Africa and South America.
The amount of dairy products and related milk volumes reflect current contracts for delivery, not completed export volumes. CWT pays export assistance to bidders only when export and delivery of the product is verified by required documentation.
April’s sales bring CWT-assisted member cooperative year-to-date export sales to 37.7 million pounds of American-type cheeses, 309,000 pounds of butter, 617,000 pounds of anhydrous milkfat, 8.5 million pounds of whole milk powder and 3.3 million pounds of cream cheese – the equivalent of 458.8 million pounds of milk on a milkfat basis.
The task force, formed to review and renew the CWT program, continue work in developing a program to meet the future needs of CWT’s members. In the past month, the group has focused on gathering information about the breadth of products produced by program members. Further assessment will examine product mixes, bid processes and market development support.
Exports of dairy replacement heifers regain strength
Dairy heifer replacement sales regained momentum in March with exports at 5,236 head, a massive change from February’s 222 total sales, based on the USDA’s Foreign Agricultural Service (FAS). Both Turkey and Vietnam led the purchases of dairy replacement heifers at 2,836 head and 2,000 head, respectively. North American trade partners Canada (203) and Mexico (193) as well as Guatemala (4) contributed to the month’s sales.
Exports of U.S. dairy embryos rose 60% in March at 265 embryos sold. Leading the purchases was Brazil at 136 embryos, followed by Switzerland (40), the United Kingdom (35), Germany (29), Japan (17), Australia (5) and France (3).
Hay exports hold steady
After a slow uptick in monthly hay exports in February, the trend continued through March with a total of 231,545 metric tons of hay exported, a 24% improvement from the previous month. China led the purchases at 109,861 metric tons, up 29% from February. However, sales to Saudi Arabia posted the largest increase at 57% more U.S. alfalfa hay than purchased a month prior with 29,490 metric tons purchased in March.
Other hay exports were 14% greater in March. In this market, Japan carried the sales with 59,026 metric tons. Yet, South Korea had the greatest percentage increase at 49% more purchased other hay compared to a month prior with 25,317 metric tons purchased in March.
Trade balance sees another month of deficits
March U.S. agricultural trade balance showed another deficit month. The U.S. Department of Commerce/Census Bureau estimated March agriculture exports at $15.536 billion and imports at $18.386 billion, for a trade balance of -$2.85 billion for the month. The deficit is about a $1 billion difference from the deficit in March 2023, when the trade balance was recorded at -$1.826 billion.
The fiscal year to date (Oct. 1, 2023 to March 2024) balance settled at a deficit of $6.925 billion.
GDT index up 1.8%
The price index of dairy product prices sold on the Global Dairy Trade (GDT) platform increased 1.8% in an auction held May 7. Compared to the previous auction, prices for individual product categories were all higher, with the exception of lactose, which was down 1.3%. Cheddar cheese posted the largest gain at 8%, while butter, mozzarella and whole milk powder were up just over 2%. Anhydrous milkfat, butter milk powder and skim milk powder each had small increases.
The GDT platform offers dairy products from several global companies: Fonterra (New Zealand), Darigold, Valley Milk and Dairy America (U.S.), Arla (Denmark), Arla Foods Ingredients (Denmark) BMI (Germany), Kerry Dairy (Ireland) and Solarec (Belgium).
The next GDT auction is May 21.
