August 11, 2020

U.S. Cheese Exports Hit Record High in June

 |  By: Fran Howard

The U.S. dollar has trended steadily lower over the past few months as the spread of Covid-19 continues to profoundly impact the U.S. economy. A weakening U.S. dollar coupled with several weeks of declining CME spot cheese prices could help boost U.S. cheese and nonfat dry milk (NDM) exports in coming weeks, says Monica Ganley, analyst with the Daily Dairy Report and principal of Quarterra Consulting and Advisory, in Buenos Aires.

“In June, cheese importers appeared unfazed by rising U.S. spot prices as U.S. exports soared to a record-high for the month,” says Ganley. U.S. cheese exports climbed to 84.7 million pounds in June, according to data from USDA’s Global Agricultural Trade System (GATS). “However, much of June’s export volume likely reflected deals booked in prior weeks when U.S. cheese was still relatively price competitive in international markets,” Ganley notes. 

A dramatic recovery in demand from Mexico contributed to the overall increase in U.S. cheese exports, Ganley notes. U.S. cheese shipments to Mexico of 25.7 million pounds were the largest monthly volume in two years. “Mexico certainly was not the only importer of large volumes of U.S. cheese in June,” she adds. “While U.S. cheese exports to South Korea retreated slightly in June, total shipments of 19.9 million pounds followed record-high sales in May, and U.S. cheese exports to South Korea remained well above historical norms in June.” 

Exports of nonfat dry milk (NDM) were also near record highs in June, according to GATS data. Total U.S. NDM exports of 167.2 million pounds fell slightly from May’s record-breaking levels but were up a whopping 77.3% from June 2019. “Rejuvenated Mexican demand for milk powder supported June’s strong U.S. exports,” Ganley says. However, she notes that even though the 59.4 million pounds of NDM that U.S. exporters shipped to Mexico in June represented a year-over-year increase of 12.9%, sales were not large enough to overcome weak sales earlier in the year. For the first six months of 2020, cumulative NDM exports to Mexico trailed prior-year levels by 16.6%, she says. 

While U.S. CME spot cheese prices have been on a steady decline in recent weeks, U.S. prices are still higher than those in competing regions. “In coming weeks, a weakening U.S. dollar should support the competitiveness of U.S. dairy product exports,” Ganley says. “However, renewed concerns about the resurgence of Covid-19 infections could dampen the outlook for U.S. dairy exports.”