Dairy cows

Skim milk powder exports are expected to increase next year.

U.S. dairy exports are on track for a stellar year despite logistical challenges due to the COVID-19 pandemic. In the mix are soaring shipments of skim milk powder, according to USDA Foreign Agricultural Service.

One notable trend is that U.S. global market share of SMP has been steadily climbing from around 30% in 2015. It is forecast to reach 41% in 2022 — overtaking the European Union, whose market share is forecast at 37% in 2022.

“Since 2014, the EU has been the dominant supplier. However, this year U.S. exports of SMP are expected to surpass EU shipments. This trend is likely to persist into next year as U.S. milk production is expected to continue to grow,” the analysts said.

U.S. SMP exports in 2021 are forecast at 887,000 tons, compared to 820,000 tons for the EU. The forecast for SMP exports in 2022 is 917,000 tons for the U.S. and 825,000 for the EU.

U.S. SMP shipments in 2021 through October had already reached 689,000 tons, accounting for nearly one-third of the $6.4 billion of total U.S. dairy exports through October. The forecast of 887,000 tons for the entire year is up almost 10% from 2020. For 2022, growth is expected to moderate with exports expected to grow by 3%.

“Global prices of SMP have been rebounding recently as a result of lackluster milk production in Oceania and the EU. SMP prices in these regions are currently hovering around $1.60-$1.65 per pound. While U.S. prices (about $1.56) remain competitive, import demand is expected to be tempered as food processors seek more cost-effective substitutes,” the analysts said.

U.S. SMP production in 2022 is forecast to grow 3% year over year, and exports are expected to slow due to smaller available milk supplies. U.S. milk production is expected to grow only 0.5% year over year in 2022.

“In addition, the price gap between U.S. and EU SMP is expected to narrow during the next several months creating a more challenging environment for U.S. exporters,” the analysts said.

Exports of other U.S. dairy products have also posted strong gains this year. U.S. cheese shipments in 2021 are expected to grow 16% to reach a record 412,000 tons. U.S. butter exports in 2021 are expected to more than double from 2020 to reach 60,000 tons.

U.S. cheese exports in 2022 are expected to be fractionally higher due to a slowdown in milk production and relatively strong domestic demand. U.S. butter shipments in 2022 are expected to fall 10% year over year to 54,000 tons.

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