Tight global supplies help U.S. dairy
U.S. dairy exports have been riding high in the saddle as of late, but will that trendline continue?
Food and agriculture consultant Betty Berning believes it will. Berning, operator of Betty Berning Consulting, shared her thoughts on dairy exports during a recent I-29 Moo University podcast.
Strong export sales certainly have been a bright spot for dairy. “2021 was a record year for U.S. dairy exports, and 2022 may top it,” Berning noted. The most recent data showed that U.S. dairy exports through August were 3.2% ahead of the first eight months of 2021, and the volume of dairy exports in August 2022 was the highest ever for that month, Berning pointed out.
“U.S. dairy exports continue to be really strong in 2022,” she emphasized. Although demand has weakened for nonfat dry milk, all other categories are having a great year in terms of export volume.
Berning said that some economists anticipate a global recession is on its way, or perhaps is already started. In the U.S., dairy is a staple in the diet and consumption continues even in a recession. However, when money is tight for consumers in developing countries, they can’t spend as many of their food dollars on protein, including dairy.
That doesn’t immediately spell bad news for U.S. dairy farmers, though.
“If there is a recession, I think that some dairy demand will be lost, but because the supply side is weaker right now in the EU and Oceania, it may continue to be a really good opportunity for U.S. dairy to export because there won’t be a lot of excess dairy in the marketplace,” she explained.
Weak milk production seasons in Australia and New Zealand and structural changes in European countries that have reduced the number of dairy cows are some factors that have shrunk worldwide dairy production. The U.S. dollar is strong right now, which typically has an impact on export sales. But, with these tight global dairy supplies, the U.S. is still relatively competitive on pricing, Berning said.
“A strong dollar can have an impact on exports, but we are not seeing a lot of that right now,” she stated. “We are competitive, and we have the product.” For these reasons, the U.S. is currently on track to finish with strong dairy exports in 2022 and possibly into the next year.
November 4, 2022