U.S. dairy exports in September posted year-over-year gains to most markets and across products, with volume up 14.2% to 186,020 metric tons.
The value of those products strengthened at nearly double the rate of volume, increasing 27.4% year over year to $655 million, according to U.S. Dairy Export Council.
“We have seen average export unit values steadily climb in 2021 due to both strengthening dairy prices and a higher percentage of U.S. dairy exports coming from higher-value products,” USDEC analysts said in their latest export report.
Nonfat dry milk and skim milk powder sold at an average price of $1.30 a pound in September, 23 cents higher than at the same time last year.
“Looking ahead, that price remains well below current markets. So we should anticipate further growth in average export prices in the months ahead,” they said.
Export of those milk powders increased 16.2% year over year in September to 70,101 metric tons.
“But the rising value isn’t just a result of strengthening global prices. It’s also due to U.S. cheese exports climbing by 20%, WPC80+ (whey protein concentrate) exports expanding by 15% and butterfat exports tripling. All are products that fetch relatively higher prices on the export market,” the analysts said.
The average price for a pound of milk solids exported by the U.S. reached its highest point since 2015 in September — with the potential to go higher in the months ahead.
From January through September, U.S. dairy exports were up 17% in value and 12.2% in volume year over year.
In the months ahead, USDEC will be keeping a close eye on three markets — Mexico, China and Middle East-North Africa, known by the acronym MENA.
U.S. dairy exports to Mexico have rebounded 19% so far in 2021 after falling by 15% in 2020. The increased exports are likely being driven by continued economic recovery, tighter domestic milk supply and product diverted to Mexico to avoid congestion at U.S. West Coast ports.
“All these factors are supportive of U.S. dairy exports to Mexico, and we will likely see continued export momentum through the end of the year and into 2022,” said Stephen Cain, USDEC economic analyst.
As for China, its domestic pork prices have fallen sharply alongside a steady rise in feed and other input costs and could have an effect on U.S. dairy exports for feed.
“Together, that is likely to dampen the incentive for local pig farmers — a key customer for whey permeate and sweet whey — to expand production,” said William Loux, USDEC director of global trade analysis.
In addition, USDEC is hearing reports that China is well stocked on milk powders after high levels of buying this year and its purchases could slow.
Questions on continued U.S. growth in MENA revolve around recent halal certification issues in the region. In addition, the U.S. price advantage on milk powders and cheddar has narrowed.
However, crude oil prices recently reached a six-year high, supporting MENA economic growth and dairy demand in key oil-producing nations.
“Overall, a significant U.S. price advantage in butter and limited EU dairy supplies provide positive signs for continued U.S. export growth to the region in the fourth quarter and into 2022,” said Paul Rogers, a correspondent for USDEC.