But record January cheese shipments and hints of improving whey fortunes bring cause for optimism.

U.S. dairy exports recorded their 12th consecutive year-over-year (YOY) monthly decline in January, as soft global economic growth continued to weigh on consumer purchasing in many key markets. U.S. dairy export volume fell 5% in milk solids equivalent (MSE) terms compared to the previous January. Export value fell 16% to $597.1 million.

While global dairy demand is running sideways and is expected to continue to do so through the first half of 2024, the new year started with a few encouraging developments as well. Chief among them was cheese.

U.S. cheese exports set a January record, rising 13% (+4,284 MT) to 38,299 MT. Very strong performance across Latin America—Mexico, Central America, South America and the Caribbean all increased purchasing—fueled the increase. (For more on cheese, see below.)

YOY high-protein whey exports (WPC80+) rose for the sixth straight month, with five of those increases (including January) well into the double digits. January volume jumped 25% (+1,139 MT). That gain came despite a down month from two of the largest U.S. WPC80+ customers: Japan and Brazil, who posted declines of -9% and -23%, respectively. Instead, the growth came from China, where volume nearly tripled (+187%, +759 MT), the Netherlands (+181%, +262 MT), India (+213%, +236 MT) and Southeast Asia (+87%, +189 MT).

Low-protein whey slipped 5%, marking the 12^th consecutive month of YOY declines. But it was by far the smallest of the streak, and two of the three HS Codes that make up low-protein whey sales rebounded in January after months of decline. (For more on whey, see below.)

Other products had less success in January. Overall YOY U.S. nonfat dry milk/skim milk powder (NFDM/SMP) exports fell 14% (-9,576 MT). Shipments to our No. 1 market, Mexico, were 28,587 MT (-22%, -7,933 MT)—the second most we’ve ever shipped to the country in January; the most NFDM/SMP volume we ever shipped to Mexico in January was 36,520 MT in 2023.

Moving forward, U.S. suppliers will be challenged to match very strong prior-year Mexican NFDM/SMP purchasing throughout the first half of 2024. U.S. NFDM/SMP exports to Mexico rose 39% (+62,842 MT) in the first half of 2023.

Apart from Mexico, U.S. suppliers did post NFDM/SMP smaller but notable gains to the Middle East/North Africa (+483%, +2,907 MT) and Japan (+1,949 MT from a very small base of 103 MT in January 2023). Despite a 44% increase in NFDM/SMP sales to Malaysia in January, overall YOY volume to Southeast Asia fell 12% for the month.

Another complicating factor on milk powder has been weak U.S. milk production, which has hampered NFDM/SMP production. There’s simply less U.S. product available to export, and buyers are not in a hurry to build inventories.

For more detailed information, as well as interactive charts and data, visit USDEC's Data Hub.

Shredded product delivers record cheese exports

Once again, cheese took center stage in January as one of the few products that saw YOY growth. However, as witnessed throughout late 2023, the gains were not spread evenly across different varieties of cheese.

In January, significantly stronger exports of shredded cheese continued to bolster the total cheese category. U.S. shipments of shredded cheese for the month rose to 13,409 MT, effectively twice the volume moved in January of last year. This persistent strength suggests that pizza demand remained robust, especially in key markets. Exports of shredded cheese to Japan, Australia and Guatemala at least doubled compared to last year while shipments to Mexico surged to 4,729 MT, nearly four times the volume seen in the same month last year.

The increase in shredded cheese exports was complemented by more modest increases in fresh cheese (+7%, +592 MT) and other varieties (+1%, +127 MT). However, exports of cheddar cheese faltered during the month. Shipments of cheddar recoiled by 41% (-3,128 MT) as exports to Japan, Mexico and especially Australia failed to best prior-year levels. On a positive note, cheddar exports to South Korea were more than double the January 2023 figures. While the drop in cheddar exports weighed on total cheese exports, it was insufficient to wipe away the gains in shredded cheese that pushed the overall category to record highs for the month.

Slicing the data differently reveals clear geographic trends for U.S. cheese exports as Latin America held the torch for expanding cheese shipments. Mexico led the way, as cheese exports surged to 12,758 MT (+39%, +3,600 MT), with increases seen across nearly every variety, except for cheddar which featured a modest decline of 275 MT (-39%) versus last year’s figures. Not to be left behind, exports to Central America and the Caribbean rose by 35% (+1,904 MT) while South America saw an increase of 70% (+910 MT).

Demand from other regions lagged as cheese exports to Japan and South Korea sank by 11% (-914 MT), while volumes to MENA fell by 34% (-964 MT). Exports to Australia and New Zealand also fell by 17% (-568 MT). Ample inventories and domestic milk supplies in Australia (spurred by good weather conditions) depressed import demand. 

Whey exports begin to improve

YOY U.S. exports of low-protein whey (0404.10) fell 5% to 38,044 MT in January, but its three component parts performed very differently.

U.S. shipments of dry whey (HS 0404.10.4000) rose for the first time in a year in January. Volume totaled 13,538 MT for the month, up 3% (+376 MT) compared to the same month last year. Dramatically stronger exports into Japan and Korea underpinned larger figures for the month, as collective shipments to those markets rose by 1,551 MT (+233%). Exports of dry whey to parts of Latin America also improved, with shipments to Mexico up by 81% (+231 MT) and volume to Central America and the Caribbean grew by 26% (+153 MT) in January.

YOY WPC (0404.10.0500) exports also gained—+4% (+456 MT)—only the second increase in the last 12 months. Two markets were responsible for virtually all the gains: U.S. exports to Mexico jumped 84% (+1,550 MT) and sales to Southeast Asia increased 69% (+1,269 MT).

However, low-protein whey overall was still pulled down by a 17% decline in modified whey (0404.10.0850). Lackluster Chinese demand remains the biggest drag on low-protein whey. Aggregate U.S. shipments to China of all three of those HS Codes—dry whey, WPC and modified whey—fell 23% (-4,381 MT in January).

Stronger exports of dry whey will be a critical escape valve for U.S. whey production into the future. January’s expanded figures are a good sign that U.S. product has made inroads in international markets. Furthermore, recent price declines at the CME spot market should make U.S. dry whey even more competitive against other international sellers and help to provide U.S. product with an edge worldwide.

Global customers clamored for high-protein whey products (WPC80+) from the U.S. in January. It was not only the sixth straight month of YOY gains, but also the sixth consecutive monthly record for WPC80+. In a marked contrast to cheese exports, the incremental growth was largely driven by improving demand in Asia. China’s demand for high-protein products shot upward during the month, but stronger shipments were also witnessed into South Asia and Southeast Asia.

Learn more about global dairy markets:

• U.S. dairy exports fall 7% in 2023

• Cheese rebounds in November, but overall U.S. dairy export volume declines

• U.S. dairy exports fall 7% in October
  

   

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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.