Continued global demand for cheese, butter, whey and lactose powered U.S. dairy exports in August.

With U.S. milk production climbing again, August data demonstrated that international customers are eager for more U.S. dairy products even as macroeconomic concerns abound.

In milk solids equivalent (MSE), U.S. dairy exports climbed 6% in August (+12,291 MT MSE). With higher prices and more cheese and butter moving overseas, value climbed even more, jumping 23%, a gain of $158.7 million. Year-to-date (YTD), U.S. dairy exports have outperformed expectations and are well on their way to setting new volume and value records again in 2022, with exports up 3% and 26%, respectively.

Aside from non-fat dry milk/skim milk powder (NFDM/SMP), U.S. dairy exports were strong across the rest of the complex. Butterfat exports have proven resilient despite higher prices, jumping 71% (+3,295 MT). Cheese exports remained solid, climbing 6% (+2,130 MT), with notable gains to Mexico, South Korea and Saudi Arabia. And sweet whey and lactose to China—up 3,700 MT and 4,183 MT, respectively—really lifted U.S. aggregate export volume.

On the flip side, NFDM/SMP exports remain hampered by limited production (-8% YTD), with U.S. shipments dropping 17% in August (-13,298 MT). Positively, exports to Mexico held close to even, falling just 1% (-454 MT), and the rest of the Latin America sought substantially more U.S. NFDM/SMP, bucking the overall trend (+50%, +3,070 MT). Rather, a dramatic drop to Southeast Asia (-40%, -11,768 MT) was the primary culprit for the overall decline. With U.S. milk production bouncing back, supply availability should increase and boost U.S. exports to Asia in Q4 and into 2023.

For detailed data and charts, check out USDEC’s Data Hub

Now, let’s jump into our two main takeaways:

Latin America key to success in 2022

If USDEC’s recent farmer mission to Chile is indicative of the long-term commitment of U.S. dairy to Latin America, then the impressive growth in exports to the region in 2022 indicates the industry’s commitment is bearing fruit.

Naturally, Mexico jumps to mind as the United States’ largest market by value. Our southern neighbor proved a resilient market in 2022 despite significant inflation for consumers. Year-to-date, U.S. dairy exports to the country are up 3% overall (+8,802 MT MSE) and August data showed a continuation of steady growth (+3%, +1,439 MT MSE). Of particular note, U.S. exports of cheese to Mexico have grown more than any other market in 2022, climbing over 13,000 MT YTD (+19%).

However, the surge in Latin American demand is not limited to Mexico. In milk solids equivalent, YTD U.S. dairy exports to Central America and the Caribbean have grown by more than a quarter (+25%, +15,892 MT MSE) and volume to South America rose by 10% (+7,556 MT MSE). Cheese to Central America and the Caribbean has been particularly notable, with Panama (+3,645 MT) and the Dominican Republic (+1,910 MT) leading the way.

Still, the growth to Latin America is not all about cheese. Indeed, NFDM/SMP shipments to Central America and the Caribbean are up by more than a third (+34%, +7,671 MT), proving a rare bright spot for NFDM/SMP exports. Additionally, South America is a bright spot for whey, despite traditionally being a relatively small market. Dry whey shipments to South America were up 152% in August (+655 MT) and have increased 58% year-to-date (+2,593 MT).

Plenty of questions remain about how durable this growth is given the uncertainty of the economic environment globally and in Latin America, but the return on U.S. dairy’s investment in the region is clear.

Dry whey led recovery in the whey complex

Most whey products performed well during August. In particular, total shipments of dry whey reached a 17-month high of 22,634 MT, an increase of 30% from a year earlier – the third consecutive month of year-on-year growth after a challenging start to 2022.

In the first five months of the year, export volumes of dry whey decreased by nearly one-fifth from year-earlier levels. In the latest data, however, shipments were up 16% in the last three months. And if the August trade trends are sustained through the rest of the year, U.S. dry whey exports will, in aggregate, manage to increase for 2022, despite the weak start.

The market primarily responsible for the sharp drop—and now the recovery—was China. During August, dry whey shipments to China moved above year-ago levels for the first time in 13 months (+52%, +3,700 MT). Totaling 10,797 MT, shipments were comparable to levels in August 2020 (11,305 MT) and higher than any monthly volume since May 2021.

Positively, the August growth in whey extended beyond dry whey. Shipments of whey permeate under the “modified whey, not elsewhere specified” code were the fourth highest on record at 20,096 MT (+7%, +1,335 MT) topped only by the three prior months. Shipments of whey protein concentrate under the HS code 0404.10 were also impressive, up 35% year-over-year (+4,048 MT) – led by increased exports to China, up 79% (+3,752 MT), and to South America (+1,414%, +1,121 MT).

Overall, whey exports, particularly sweet whey and permeate to China, are recovering thanks to the persistent rebound in pork prices. While still far below the highs experienced in the depths of African Swine Fever, pork prices are likely sufficient to encourage investment and additional utilization of whey as a feed input. Ultimately, so long as pork prices hold in China, so too should U.S. whey exports to the country.

Learn more about global dairy markets:

• July export gain runs growth streak to four straight months

• U.S. dairy exports soar in June, climbing 9%

• U.S. dairy export value surpassed $900 million in May as cheese volume soared

• U.S. dairy exports set multiple records in 2021

   

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The U.S. Dairy Export Council fosters collaborative industry partnerships with processors, trading companies and others to enhance global demand for U.S. dairy products and ingredients. USDEC is primarily supported by Dairy Management Inc. through the dairy farmer checkoff. How to republish this post.