ARLINGTON, Va. – Despite year-over-year volume growth ending after 14 straight months, U.S. dairy exports remain 4 percent ahead of the previous record, with one month to go, according to a new report by the U.S. Dairy Export Council (USDEC).

“Overall, November (2020) did little to dampen year-to-date (YTD) dairy export volume and value,” the Jan. 8, 2021, report read. “Through 11 months, U.S. dairy export volume on a milk solids equivalent basis (MSE) is up 14 percent over 2019 to a total of 1,923,176 metric tons (MT) – 71,345 MT greater than the previous record year in 2018. 

“Value is on a similar trajectory, up 10 percent over 2019 to $6.06 billion through November (2020),” the report said. “Both volume and value have already surpassed 2019 year-end levels.”

Still, the report said, falling just 0.2 percent in November 2020, U.S. dairy exports declined on an MSE basis for the first time in 2020. 

“A 27 percent gain in whey products (+10,221 MT) was not enough to account for reduced volumes of non-fat dried milk and skim milk powder (NFDM/SMP) (-8 percent, -5,193 MT), cheese (-16 percent, -4,509 MT), and lactose (-14 percent, -4,415 MT),” the report said.

“As a higher value product on a per MT basis, the diminished cheese exports – in part caused by record high U.S. domestic prices in the summer and fall – contributed to the 5.1 percent decline in total value for the month,” the report added.

In addition, U.S. whey exports delivered another month of growth in November 2020, and helped mitigate declines in milk powder, cheese and lactose, with whey volume rising 27 percent to 48,569 MT for the month, and is up 24 percent YTD.

“The major factors driving U.S. whey sales remain the same: heavy Chinese purchasing to support efforts to rebuild a pig herd decimated by African Swine Fever,” the report said. “China reported that its herd had reached about 90 percent of normal levels at the end of November 2020.” 

Overall, U.S. whey shipments to China more than doubled in November 2020 to 21,616 MT, and were up 111 percent YTD. 

“U.S. suppliers have been able to grow volume and recapture market share in large part due to the retaliatory tariff exemption secured in 2019, and renewed for another 12 months in 2020,” the report said.

With November’s data, 2020 has already guaranteed another record year, the report said. 

“Exports to Japan (+27 percent), Southeast Asia (+73 percent), South Korea (+165 percent), and the EU+UK (+294 percent) all saw big gains in November,” the report said. “For much of this year, we have talked about Mexico buying less NFDM/SMP, a development that has driven U.S. suppliers to look elsewhere – especially to Southeast Asia. 

“This trend abated in November with shipments of NFDM/SMP to Mexico posting the second highest month of the year behind only October, gaining 16 percent (+3,366 MT) over November 2019,” the report added. “It appears that powder demand, while still not consistently back to pre-Covid-19 levels may be on the road to recovery with an improved fourth quarter.”

On the flip side, the report said, exports of cheese to Mexico significantly weakened.  

“Reduced consumer demand inside of Mexico due to the COVID-19 pandemic and its severe economic consequences likely contributed to (last) November’s 38 percent decline (-3,356 MT) in cheese exports to Mexico. 

“The bigger factor was probably U.S. prices incentivizing international buyers to delay purchases over the summer and fall when domestic spot prices kept breaking records, and cheese production was short, compared to retail and food box demand,” the report added. “Still, despite the pandemic, YTD cheese volumes to Mexico remain close to prior-year levels, down just 1 percent.”

The report said more affordable U.S. cheese towards the end of 2020 should have been the signal for international buyers – particularly in Mexico – to buy U.S. product. 

“As a result, exports should rebound, but with more price volatility on the way, volatility in export volumes may follow,” the report said. “Through November (2020), U.S. NFDM/SMP exports to Southeast Asia were up 50 percent, compared to the same period last year – growth of more than 100,000 MT in 11 months.

“That acceleration was due primarily to a change in market share as the U.S. went accounting from 31 percent of total Southeast Asian NFDM/SMP trade in 2019 to 46 percent on an annualized basis,” the report added. “So, overall trade to the region is still very strong in 2020, despite (last) November’s figures.”

Looking ahead, the USDC said it would be watching closely what happens with Southeast Asian demand.

“But going into 2021, U.S. exports to the region should remain much closer to the record-breaking levels we saw in 2020 than the preceding era, given the growing U.S. presence in the region, price competitiveness, and product availability going into a strong spring ush.”