U.S. dairy exports are experiencing significant growth, driven by sales of milk powder to Southeast Asia and whey to China.
For January through July, exports were up 15% in volume to more than 1.3 million metric tons and 14% in value to more than $3.9 billion. Exports of NDM/SMP were up 28%, and whey shipments were up 16%.
Since April, roughly half of the export growth has come from additional sales of milk powders to Southeast Asia, according to the U.S. Dairy Export Council.
NDM/SMP shipments to the region in July were 30,103 tons, up 150% from a year earlier. July powder shipments to Indonesia, the Philippines and Vietnam were more than triple the volumes of a year earlier.
Total U.S. exports of NDM/SMP in July increased 52% year over year to 75,294 tons, with 40% going to Southeast Asia.
“The two main drivers of the U.S. dairy growth in the region are greater demand overall and the U.S. claiming a greater share of the market,” William Loux, USDEC director of global trade analysis, told Capital Press.
Trade data don’t break out NDM — nonfat dry milk — from SMP — skim milk powder — but Southeast Asia generally prefers SMP, he said.
“U.S. exporters competed strongly to gain a greater share of that market. In the first half of 2019, the U.S. accounted for about 26% of total SMP trade to the region. In 2020, U.S. exporters claimed a 44% market share,” he said.
Some of the export success was driven by price, as U.S. powder prices have been lower than European and New Zealand powder for much of 2020.
“Additionally, some increase in share was to be expected after Europe had a particularly strong 2019 — buoyed by cheap product that had come out of public intervention — and relations deteriorated between the European Union and Indonesia,” he said.
Another major reason is that over the past decade, U.S. exporters have invested in relationships, supply chains and the right product specifications for the Southeast Asian market to be competitive, and that is all bearing fruit in the form of greater exports, he said.
Increased exports to Southeast Asia have been partly driven by a desire to build inventory just in case of supply disruption, as a result of COVID-19 or other issues, Loux said.
“USDEC’s expectation is that Southeast Asia will want to maintain these current inventory levels so long as COVID-19 remains the primary issue in the global market. So we don’t anticipate a significant drawdown in their total purchasing any time soon,” he said.
Exports of whey products were also strong in July, up 30% topping 45,000 tons for the first time in almost two years.
Whey sales to China continue to recover from depressed levels last year when African swine fever decimated the country’s hog herd and reduced demand for whey for feed. Whey shipments in July were lower than the two previous months but more than double a year earlier.
In addition, whey sales to Southeast Asia in July were an 11-month high for a 45% increase over a year earlier.
July exports of milk powders, cheese, whey products, lactose and butterfat totaled 196,080 tons valued at $554.1 million — an increase of 22% in volume and 17% in value.