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Huge month for cheese unable to offset declines in milk powder, lactose and whey.
After a robust year-over-year (YOY) efficiency in February, U.S. dairy exports slipped again into the pink in milk solids equal (MSE) phrases in March. YOY MSE quantity fell 7% regardless of surging U.S. cheese gross sales and positive factors in high-protein whey, milk protein focus and whey permeate.
With March information in, year-to-date (YTD) U.S. MSE export quantity was down 3.1% within the first quarter, in comparison with the earlier 12 months. U.S. export worth fell 10% to only over $2 billion.
The most important optimistic spotlight in March was cheese. U.S. cheese shipments jumped 20% (+8,494 MT) to 50,022 MT in March, marking the primary time quantity ever topped 50,000 MT in a single month.
Mexican demand remained sturdy, with YOY March shipments up 8% to fifteen,284 MT. The nation has grown into the USA’ most dependable cheese buyer, as evidenced not solely by recent-month gross sales positive factors however by the previous few years. The final time YOY U.S. cheese shipments to Mexico declined was June 2021—in different phrases, we’ve seen a outstanding 33 straight months of YOY positive factors.
Whereas the Mexico positive factors are spectacular, U.S. cheese success in March was way more broad-based, together with Japan, South Korea, the Center East/North Africa (MENA) and the remainder of Latin America. (For extra on U.S. cheese export development in March, see beneath.)
Along with cheese, U.S. WPC80+ exports continued their scorching streak in March. YOY shipments jumped 32% (+2,153 MT), with widespread geographic success. YOY gross sales to our No. 1 market, Japan, rebounded (+61%, +603 MT) after a streak of lackluster months. Exports to India soared greater than 10-fold (+623 MT), shipments to Southeast Asia rose 55% (+354 MT), gross sales to China rose 29% (+525 MT), quantity to Canada jumped 77% (+598 MT), shipments to South Korea gained 235% (+332 MT), and exports to Brazil grew 33% (+190 MT).
Much less profitable in March was nonfat dry milk/skim milk powder (NFDM/SMP). U.S. NFDM/SMP shipments fell 18% (-14,335 MT) as gross sales tendencies to the highest two U.S. markets—Mexico and Southeast Asia—continued to diverge. Exports to Southeast Asia grew 13% (+2,595 MT) with sizeable positive factors to the Philippines (+121%), Malaysia (+113%), Vietnam (+37%) and Thailand (+42%) offsetting declines to Indonesia and Singapore. YOY U.S. NFDM/SMP shipments to Southeast Asia rose 13% (+7,576 MT) within the first quarter.
However, gross sales to Mexico, which started to melt in late 2023, fell 37% (-15,700 MT) in March. (For extra on Mexico and total NFDM/SMP tendencies, see beneath.)
Between NFDM/SMP, cheese and WPC80+ was low-protein whey (HS 0404.10). YOY U.S. low-protein whey exports fell 8% (-4,081 MT) in March to 45,366 MT. Decreased demand from China stays the overwhelming trigger for the continuing U.S. low-protein whey droop. YOY U.S. shipments to China fell 36% (-9,080 MT) in March, greater than twice the general quantity decline for the month.
Whereas down, there have been a few optimistic indicators within the low-protein whey class: 1) complete U.S. quantity for March was the very best since March 2023; 2) whey permeate demand (utilizing the “modified whey, not elsewhere specified” HS code as a proxy) seems to be slowly working its means again. U.S. shipments of whey permeate have grown in quantity for 3 straight months. March YOY shipments elevated 12% (+1,595 MT).
Mexican NFDM imports waning
Weaker international demand for NFDM/SMP and a tighter home provide surroundings are difficult exports. U.S. NFDM/SMP exports dropped 18% (-14,334 MT) in March. Slower shipments to Mexico led the decline—down 37% (-15,700 MT) for March and off by 26% (-29,337 MT) year-to-date.
Mexican NFDM imports have underperformed the earlier 12 months each month since September 2023. Contributing to the decrease import quantity are elevated Mexican milk manufacturing (decreasing reliance on imported NFDM), the tighter NFDM provide surroundings within the U.S., and price-competitive cheese from the U.S. (though that could be shifting).
Mexican milk manufacturing confronted quite a lot of challenges final 12 months, however home milk output began 2024 on the rise, in distinction to declines in lots of different areas around the globe. That elevated home provide has lessened the necessity for imported NFDM, and with the U.S. supplying successfully 100% of Mexican NFDM imports, the pullback in NFDM quantity is being felt completely by U.S. exporters.
U.S. NFDM manufacturing and shares are down considerably as nicely. U.S. NFDM/SMP manufacturing dropped 19% in February and is down 15% to YTD. Shares are on the lowest ranges in practically a decade—down 36% in February and down 29% YTD. The decrease quantity, paired with weaker demand from our No. 1 export vacation spot, Mexico, is pressuring export development within the near-term.
Inexpensive cheese out of the U.S. has additionally eroded NFDM imports. A big portion of Mexican NFDM imports is used for cheese fortification. With decrease U.S. cheese costs, there may be an incentive to easily import cheese relatively than take the additional step of importing NFDM to assist home cheese manufacturing.
U.S. cheese costs during the last 5 months have been very worth aggressive and sure supported the elevated U.S. cheese quantity to Mexico. Nevertheless, U.S. cheese costs have rallied extra lately, and if cheese costs stay elevated, it might push Mexican consumers to return to NFDM. However with U.S. NFDM/SMP manufacturing and shares down considerably, there’s a restrict to how a lot NFDM is obtainable for export to Mexico even when the incentives for NFDM imports improve.
Cheese exports impress once more in March
As soon as extra, cheese exports stole the present in March. For the primary time, U.S. cheese exports topped 50,000 MT in a single month, notching a 21% improve (+8,494 MT) relative to the prior 12 months and stretching the pattern of year-over-year will increase to 5 consecutive months.
Mexico continued to show a wholesome urge for food for U.S. cheese, as exports rose 8% (+1,159 MT) to fifteen,284 MT, the second largest month-to-month quantity ever, behind solely February’s determine. However maybe much more encouraging, there have been some vital enhancements past the USA’ largest buyer.
After a chronic interval of contraction, cheese exports to South Korea surged by 132% (+3,963 MT) in March, representing the primary YOY achieve since late 2022. Japanese demand was additionally strong, delivering a 52% (+1,734 MT) improve 12 months over 12 months. Many of the development in cheese exports to Japan and Korea had been for recent cheese (+137%, +1,543 MT) and cheddar (+59%, +1,543 MT), which can be a mirrored image of foodservice channel restoration in these markets.
U.S. cheese exports to MENA grew 132% (+2,603 MT), marking continued demand resurgence in that area, whereas Latin America past Mexico additionally impressed. Cheese exports to Central America and the Caribbean climbed (+8%, +550 MT) to 7,297 MT, whereas South America contributed a extra modest 171 MT (+7%) to the month-to-month complete.
In the meantime, U.S. cheese volumes fell into Oceania (-27%, -1,295 MT), China (-37%, -449 MT), and Southeast Asia (-26%, -449 MT).
Aggressive costs doubtless performed a central position in catapulting U.S. cheese exports to report highs in March. The spot CME cheddar worth reached its nadir in late December, creating an excellent alternative for overseas consumers. That window doubtless continued via mid-April whereas cheese largely remained beneath $1.60/lb. Nevertheless, the market’s current run-up to the excessive $1.70s has created convergence with European and Oceania costs and can doubtless give pause to consumers earlier than reserving further volumes.
Foreign money dynamics have compounded pricing to additional affect cheese exports. A persistently sturdy Mexican peso has doubtless supported further exports south of the border, whereas weak point within the Japanese yen and Korean gained makes the demand energy exhibited by these markets in March all of the extra spectacular.
Wanting ahead, a mixture of aggressive pricing and favorable overseas trade dynamics can be crucial to maintain U.S. cheese transferring offshore at a wholesome clip.
Learn extra about international dairy markets:
The U.S. Dairy Export Council fosters collaborative business partnerships with processors, buying and selling corporations and others to boost international demand for U.S. dairy merchandise and elements. USDEC is primarily supported by Dairy Administration Inc. via the dairy farmer checkoff. Tips on how to republish this put up.
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