Asian Demand Drives U.S. Dairy Exports
March 5, 2021
U.S. dairy product exports to Southeast Asia got off to a running start this year, maintaining the swift pace they set in 2020. This is an especially impressive feat in light of ongoing headaches in the supply chain, as shipping containers remain in short supply. Such stamina signals strong demand for dairy products from Southeast Asian consumers. At the same time, though, Mexico’s demand for U.S. dairy products faltered, offsetting some of the good news from Asia.
Exports of consumer-ready dairy products from the United States to Mexico limped along.
The country’s struggling economy and a downturn in tourism have weighed heavily on demand from foodservice, and rising milk production in Mexico has reduced the need for imported dairy products. Mexico imported just 9.6 million pounds of U.S. cheese in January, a nine-year low and 49% less than in January 2020. Meanwhile, South Korea took Mexico’s usual place as the top market for U.S. cheese exports in January as South Korean imports jumped 38.5% year over year to 12.5 million pounds.
Similarly, Japanese imports of U.S. cheese rose 30.7% from the prior year, but the additional sales to South Korea and Japan were not enough to offset lagging sales to Mexico. All told, the United States sent 55.6 million pounds of cheese abroad, 9.9% less than in January 2020.
Mexican demand for dairy ingredients proved more resilient, but Mexico’s imports of U.S. milk powder in January were still down 3.8% from the prior year. At the same time, Southeast Asian buyers stepped up their purchases. Demand from the Philippines and Vietnam was especially strong. U.S. milk powder exports totaled 138.6 million pounds.
While that was 9.6% lower than the very high volume reported the prior year, it was still the second-highest January export figure on record.
Chinese demand for U.S. whey products propelled U.S. dry whey exports to 40.3 million pounds, up 34.4% from January 2020. China’s appetite for whey powder has helped to keep global stocks in check and rally prices. Spot whey powder closed today at 58ȼ per pound, the highest value in its three-year run at the CME spot market.
The United States exported 6.2 million pounds of butter in January, nearly 82% more than the prior year and the strongest January export sales since 2014. Sizeable shipments to Canada and the Middle East helped the United States become a net exporter of butterfat in January for the first time since April 2018. Since the fourth quarter of 2020, U.S. butterfat imports from New Zealand and India have been unusually high, and they remained lofty in January, but recent gains in butter values in Oceania suggest that U.S. butterfat imports likely peaked in December. However, the United States could import more Irish butter
and European cheeses in coming months. The United States and European Union announced this afternoon that they would suspend all tariffs related to the trade dispute over subsidies to American aircraft manufacturer Boeing and France’s Airbus.
This includes U.S. tariffs on European butter and cheese. Although U.S. commodity butter and cheese values are well below that of European product, the change will likely result in an uptick in imported dairy products on U.S. store shelves.