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2020 Exports Post 6-Year High

February 5, 2021

Despite a turbulent year, U.S. exporters managed to ship $6.5 billion worth of dairy products abroad in 2020. While unable to best the $7.1 billion record set in 2014, last year was the strongest year for exports since 2014 and represented an 8.5% increase in value over the prior year, after adjusting for leap day. Strong exports of dry products, especially nonfat dry milk (NDM) and dry whey were instrumental in boosting overall U.S. exports last year. Even though the annual numbers were solid, December exports of key dairy products, such as NDM and cheese, were relatively lackluster, likely stymied by a lack of available shipping containers. U.S. exporters moved 129.7 million pounds of NDM in December, 15% less than in the same month in 2019. Even though NDM shipments to Mexico, the United States’ largest trading partner, were up 3.8% year over year to 56.1 million pounds, they remained mediocre compared to historical values. Mexico accounted for just 35.3% of U.S. NDM exports in 2020, the lowest share since 2013.

However, other destinations, particularly in Southeast Asia, picked up the slack. While year-over-year exports to the Philippines and Indonesia slipped by double digits in December, annual volumes were up 64.6% and 46.3%, respectively.

Cheese exports also contracted in December, slipping 1.1% to 57 million pounds vs. December 2019. Again, expanding exports to Asia compensated for weak Mexican demand. While year-over-year U.S. cheese exports to Mexico fell 20.1% in December, the fourth consecutive month of losses, exports to South Korea and Japan rose 19% and 42.6%, respectively. Even though U.S. Cheddar block prices had returned to parity with other global suppliers by late November, they spent most of the weeks prior to that—when December exports would likely have been contracted— above $2/lb. Given cheese’s significant premium to international prices, it’s impressive exports did not suffer further.

...Cheese and NDM struggle in final month of 2020

Once again, whey exports starred in December’s export figures, with aggressive buying from China continuing to push volumes out the door. Total whey exports climbed 27.5% year over year to 107.2 million pounds, with nearly half of the volume headed to China. Dry whey accounted for much of the gain, up 38% to 37.8 million pounds, however whey protein concentrates also played a role, with exports rising 28.2% year over year to 31.6 million pounds, the largest volume posted in the last two years. Cumulative whey shipments for 2020 were 23.4% higher than in 2019, after accounting for the extra day last year.

Butter also had a strong December, boasting exports that were more than twice those of the same month the year prior. At 6.4 million pounds, December butter exports were the strongest since May 2018. While the usual suspects, such as Canada and Mexico, saw exports jump in December, destinations in the Middle East also increased purchases. Saudi Arabia imported nearly 700,000 lbs. in December and Bahrain bought a record 1.7 million pounds. For most of October and November, when December shipments were likely committed, U.S. butter prices ranged between $1.30 and $1.50/lb., holding a 15¢ to 50¢ discount to global markets. At today’s prices, however, that advantage has nearly doubled, suggesting that strong butter exports could persist because butter exports booked today will likely not appear in the data for a couple of months.

After slipping for most of the week, CME Cheddar blocks erased their losses to forge higher, rallying 10.5¢ in today’s session to end the week at $1.64/lb., a 6.5¢ gain from last Friday’s close. Barrels found traction throughout the week, ultimately closing at $1.50/lb. today, 11¢ higher than last week.

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