June 13, 2019

Trade Disputes Take Toll on April Dairy Exports

 |  By: Fran Howard

Coming off a recent win in the tariff battle with Mexico, President Donald Trump made it clear that he will hold firm on his demands on China in the U.S.-China trade dispute. In the meantime, U.S. dairy producers continue to pay a high price as exports of U.S. dairy products falter.

“It appears the weight and duration of the U.S. trade disputes could be starting to take a toll on U.S. dairy exports,” says Sara Dorland, dairy analyst with the Daily Dairy Report and managing partner at Ceres Dairy Risk Management. “With few exceptions, U.S. exports struggled in April to better previous-year volumes.” 

U.S. nonfat dry milk powder exports of nearly 125 million pounds in April slipped 25% below prior-year levels, with volumes to Mexico down by 14.8 million pounds, compared to April 2018, according to Global Trade Atlas data. Year over year, U.S. exports of nonfat dry milk to Pakistan, the Philippines, and Indonesia also fell in April.

“At the same time total U.S. exports of nonfat dry milk declined, China’s imports of milk powders accelerated in April, hitting record-high levels for any April since 2015,” Dorland notes. China imported 57.4 million pounds of skim milk powder (SMP), the highest April volume on record and 44.5% more than in April 2018, according to Global Trade Atlas. At 115.1 million pounds, Chinese imports of whole milk powder (WMP) exceeded the prior year by 67.1%. Year to date, Chinese imports of SMP and WMP topped 1 billion pounds, the strongest start to any year since 2014. 

Year-over-year total U.S. exports of sweet dry whey powder plunged 55% in April to 19.6 million pounds, the lowest volume for any April since 2011. U.S. exports of dry whey to China also collapsed, falling 11.1 million pounds compared to April 2018. “U.S. exporters made modest gains with other countries, but not enough to offset the loss from the United States’ largest whey powder trading partner,” Dorland says. 

China’s total imports of whey products in April fell 18.2% from the previous year to 75.2 million pounds, due in large part to lower demand for whey in piglet rations caused by outbreaks of African swine fever. “China's whey imports have trailed the prior year since November, and are down more than 25% year to date,” Dorland notes. “In April, the United States accounted for 40.5% of China's whey imports, and while that’s a stronger showing than in recent months, it is much less than the 55% to 65% share that was typical before higher tariffs entered the picture in the second half of last year.”

U.S. exports of whey protein concentrate (WPC) with less than 80% protein levels in April totaled 19.6 million pounds, a sharp 55% drop from last year’s 43.6 million pounds. “Again, lower exports to China accounted for the significant reduction, with volumes to China plummeting by 16.8 million pounds,” Dorland notes. U.S. exports of WPC with more than 80% protein fared well in April at 8.5 million pounds, up 15.1% from the previous year.

U.S. butterfat exports in April also tanked 71% compared to last year to 3.2 million pounds, the lowest volume for any month since September 2017, according to Dorland. “U.S. cheese export shortfalls were more tempered,” she says. At 71.5 million pounds, April exports were only 1.3% shy of last year’s volumes and ranked as the third-highest monthly volume for any April on record, she adds.