Dairy Exports Reach Second Highest Monthly Value
June 8, 2022
U.S. dairy exports grew 1% on a milk solids equivalent basis in April, setting a new volume record for the month. The growth was modest, but the value of those exports exceeded 200,000 metric tons (MT) on a milk solids equivalent basis. The worth of those exports reaching nearly $850 million, marks an increase over April 2021. This is the second-highest monthly value ever, topped only by March 2022.
According to Phil Plourd, head of market intelligence with ever.ag, record exports reflect a few things. First, he says that milk production in the EU and New Zealand has been slumping, leaving voids in global supply and creating opportunities for U.S. exports.
“Beyond global supply constraints, price matters, of course, and at the end of last year and early this year, U.S. prices were well below values elsewhere in the world,” Plourd shares. “Various circumstances have been giving the U.S. an advantage and marketers have been capitalizing on the opportunity. And, remarkably, that’s all happened in a challenging logistics environment.”
Cheese continues to be the U.S. export star in 2022. After shipping a record 41,693 MT of cheese in March, U.S. suppliers repeated the performance in April with 41,375 MT in exports. It was the first time the United States ever exported more than 40,000 MT in two consecutive months.
Individual commodities and their volumes change from April 2021 include:
Nonfat dry milk & skim milk powder – down 6%
Whey products – down 1%
Cheese – up 2%
Lactose – up 12%
Butterfat – up 25%
WPC 80 – up 5%
Whole milk powder – down 14%
Fluid milk & cream – down 7%
Plourd says that things are not as clear going forward. On the positive side of the ledger, EU and New Zealand milk production have not really improved much. April output in the Netherlands, for example, was still down 2.5% year-over-year. Additionally, year-over-year production in New Zealand was down 5.6%.
“So, we aren’t dealing with a lot of extra supply from major export competitors,” Plourd says. “On the negative side, the price gaps are not nearly as big as they were earlier this year. Indeed, butter out of New Zealand is about 30 cents per pound cheaper than CME spot. U.S., EU and New Zealand cheese prices are all within 15 to 20 cents of each other, narrowing any U.S. edge.”
Erick Metzger, general manager of National All-Jersey, says producers will enjoy May milk checks next week when they arrive. “Many producers will see prices higher than they’ve ever seen before.”
Plourd says that higher dairy product prices, general inflationary pressures and deteriorating economic performance mean that demand is more vulnerable.
“The bottom line is that the U.S. will still be in the export mix in the months ahead, but volumes may level off or even decline,” he says.