This website requires certain cookies to work and uses other cookies to help you have the best experience. By visiting this website, certain cookies have already been set, which you may delete and block. By closing this message or continuing to use our site, you agree to the use of cookies. Visit our updated privacy and cookie policy to learn more.
This Website Uses Cookies
By closing this message or continuing to use our site, you agree to our cookie policy. Learn More
This website requires certain cookies to work and uses other cookies to help you have the best experience. By visiting this website, certain cookies have already been set, which you may delete and block. By closing this message or continuing to use our site, you agree to the use of cookies. Visit our updated privacy and cookie policy to learn more.
Dairy Foods logo
search
cart
facebook twitter linkedin youtube
  • Sign In
  • Create Account
  • Sign Out
  • My Account
Dairy Foods logo
  • Home
  • Magazine
    • Current Print Edition
    • Digital Edition
    • Dairy Product Innovations Newsletter
    • Columnists
    • Archives
    • Dairy 100
    • State of the Industry Report
    • Supplier News
    • Processor News
    • Featured Product Advertisement
  • Products
    • Best of ...
    • Butter
    • Cheese
    • Cultured Dairy
    • Frozen Desserts
    • Ice Cream/Novelties
    • Milk
    • New Products
    • Non-Dairy Beverages
    • Sales Data
    • Whey, Milk Powder
    • Dairy Alternatives
    • Submit Your Product
  • Ingredients
    • Cocoa
    • Colors/Flavors
    • Cultures/Enzymes
    • Fiber
    • Inclusions
    • Omegas/Lipids
    • Prebiotics
    • Probiotics
    • Sweeteners
    • Texturants
    • Other
  • Operations
    • Equipment
    • Processing
    • Packaging
    • Food Safety
  • Web Exclusives
    • Behind the Scenes
    • Blogs
    • Case Studies
    • Dairy Foods TV
    • Digital Brochures
    • Galleries
    • Podcasts
    • Webinars
    • White Papers
  • Directories
    • Buyers Guide
    • Dairy Plants USA
    • Take a Tour
  • Awards
    • Breakthrough Award
    • Exporter of the Year
    • Plant of the Year Award
  • More
    • Associations
    • Calendar of Events
    • Classifieds
    • Market Research
    • Dairy Foods Store
    • FISA Distributor Guide
    • Interactive Product Spotlights
    • Supplier Spotlights
    • Custom Content & Marketing Services
    • Tradeshow and Events
    • Dairy Facts & Stats
    • eBooks
  • Contact
    • Contact Us
    • Advertise
  • Subscribe
    • Print & Digital Edition Subscriptions
    • Dairy Product Innovations eNewsletter
    • Online Registration
    • Subscription Customer Service
    • Connect with Dairy Foods
Home » 2019 State of the Industry: US dairy exports lose their pass line bets
Dairy Foods & BeveragesDairy Processor NewsSales Data

2019 State of the Industry: US dairy exports lose their pass line bets

But odds are, 2020 will have winners on the field

2019 State of the Industry: US dairy exports lose their pass line bets
2019 State of the Industry: US dairy exports lose their pass line bets
U.S. Milk equivalent exports
2019 State of the Industry: US dairy exports lose their pass line bets
2019 State of the Industry: US dairy exports lose their pass line bets
November 22, 2019
Nate Donnay
KEYWORDS dairy export market / dairy exports / dairy exports forecast / state of the industry
Reprints
No Comments

The state of the export market for U.S. dairy products is mixed: It depends on the dairy product that you’re exporting and on the destination of the product.

But if I had to sum up the overall prospects for U.S. dairy exports in 2020, I would say they look good. The biggest headwinds we face are slowing global economic growth and U.S. cheese and butter prices that are well above the world market.


2019 State of the Industry Report
Milk | Cheese | Cultured | Ice Cream | Butter | Non-dairy Beverages | Ingredients | Exports

View Past Reports


 

Cold dice

First, let’s talk about how 2019 is shaping up. Last year in this space, I argued that exports could still turn out decent despite the retaliatory tariffs that China and Mexico were placing on U.S. products. If you look at exports of dairy products that were not affected by retaliatory tariffs for the first seven months of this year, they were up 3.3% from last year.

The United States has continued to make headway in markets outside of China and Mexico. However, exports that were hit with retaliatory tariffs were down 53% during the first seven months of the year. That nets out to a 13.7% total decline in total exports. U.S. exports have been a little weaker than I was expecting, but they haven’t been horrible.

The impact of retaliatory tariffs is starting to fade: Mexico dropped their retaliatory tariffs on U.S. cheese in May, and China removed the retaliatory tariff on U.S. dry permeate for the next 12 months. U.S. cheese exports to Mexico are down only 11.3% year-to-date, so removing the tariffs won’t provide a big boost to exports, but any little bit helps.

The retaliatory tariffs weren’t the only thing impacting shipments of whey products to China. I estimate that about a third to a half of the decline in whey product shipments to China was due to the outbreak of African Swine Fever (ASF) and not directly related to the tariffs. So the full recovery in U.S. whey exports will be tied to the eventual stabilization and rebuilding of the Chinese hog herd.

The good news is that it appears that some farms in China are now trying to restock their barns, and Chinese whey imports were better than expected in June and July.

While the hog herd in China may be close to stabilizing, new cases of ASF are being detected in other Asian countries. China produced more than 700 million hogs in 2017. If you add together hog production across all of the other Asian countries, it totaled only 149 million in 2017.

If China’s hog herd is cut in half, it reduces total global demand for whey products by 6%. If half the herd in the remainder of Asia is slaughtered, it reduces global demand by only 1.6%. While news of ASF spreading further in Asia isn’t good for U.S. dairy exports, the impact won’t be anywhere near the impact ASF in China has had.

 

European exports seven out

The best prospects for stronger U.S. dairy exports (and prices) in 2020 are probably nonfat dry milk (NFDM) and skim milk powder (SMP). Europe is running out of SMP. From January through June, its SMP production was up 8,000 metric tons (MT) from the previous year, but its exports were at a record high (up 121,000 MT).

If Europe keeps up this pace, its estimated inventories will be near zero by the end of 2020. EU exports will have to slow down in 2020, and that opens opportunities for U.S. exporters.

When I worked through the balance tables for 2020, it looks like the United States — and maybe New Zealand (if whole milk powder exports to China slow) — will be the only major exporter that will be able to fill in the demand gap left by a slowdown in EU exports. By my numbers, we should be looking at a record year for U.S. NFDM/SMP exports in 2020.

With the hog herd in China likely bottoming out in late 2019 and the further spread of ASF in Asia having only a minor impact on overall whey demand, U.S. whey product exports in 2020 should improve. With the EU running out of SMP, U.S. NFDM/SMP exports should also improve.

U.S. cheese prices are well above the other major exporters in late 2019, so U.S. cheese exports are going to struggle a bit in early 2020. And U.S. butter exports are facing the same problem. But if I look at total milk-equivalent exports in 2020, I think the United States could be near a record high and up 8% from 2019. The state of the export market for U.S. dairy products is mixed, but 2020 does look brighter than 2019.   


2019 State of the Industry Report
Milk | Cheese | Cultured | Ice Cream | Butter | Non-dairy Beverages | Ingredients | Exports

View Past Reports


subscribe to dairy foods

Recent Articles by Nate Donnay

Understand fluctuating global dairy demand

How should we measure ’milk‘ production?

Will EU intervention stocks affect the price of skim milk powder?

2018 State of the Industry report: Dairy exports are stepping on the gas

Nate Donnay is the director of Dairy Market Insight at INTL FCStone Financial. Donnay has been applying his interest in large complicated systems and statistical analysis to the international and U.S. dairy markets since 2005. As a consultant, he has worked with clients at all levels of the dairy marketing chain from the farm level up to processors and packaged foods companies, food distributors and restaurants, as well as industries such as banks, private equity groups, government agencies and industry associations.

Related Articles

2018 State of the Industry report: Dairy exports are stepping on the gas

State of the Industry 2017: Dairy exports have a positive outlook

Will EU intervention stocks affect the price of skim milk powder?

Understand fluctuating global dairy demand

You must login or register in order to post a comment.

Report Abusive Comment

Subscribe For Free!
  • Print & Digital Edition Subscriptions
  • Dairy Product Innovations eNewsletter
  • Online Registration
  • Subscription Customer Service
  • Connect with Dairy Foods

More Videos

Popular Stories

Saputo Inc. is our Processor of the Year

2019 Processor of the Year: Saputo Inc., a giant in more ways than one

2019 State of the Industry: Ice cream and frozen novelties are hot and cold

2019 State of the Industry: Ice cream and frozen novelties are hot and cold

2019 State of the Industry: Butter wins a combination ticket

2019 State of the Industry: Butter wins a combination ticket

Borden premium eggnog

Houston residents start petition to bring back Borden’s Premium eggnog

best new dairy products 2019

It’s time to vote for your favorite new dairy products!

Events

January 1, 2030

Webinar Sponsorship Information

For webinar sponsorship information, visit www.bnpevents.com/webinars or email webinars@bnpmedia.com.

View All Submit An Event

Poll

ESL Technologies

Dairy beverage producers: Where does your company stand when it comes to extended-shelf-life (ESL) technologies?
View Results Poll Archive

Products

Tharp & Young on Ice Cream: An Encyclopedic Guide to Ice Cream Science and Technology

Tharp & Young on Ice Cream: An Encyclopedic Guide to Ice Cream Science and Technology

An at once an all-inclusive guide to the meaning of hundreds of technical terms and ideas needed for ice cream manufacturing, as well as a practical introduction to the ingredients, freezing methods, flavoring, and packaging of ice cream, sherbet, sorbet, gelato, frozen yogurts, novelties and many other kinds of frozen desserts.

See More Products

best new dairy products 2019

Dairy Foods Magazine

dairy foods december 2019

2019 December

Check out the December issue of Dairy Foods, including our profile of our Processor of the Year: Saputo.
View More Create Account
  • More
    • Media Kit
    • Contact Staff
    • Order Reprints
    • List Rental
    • Food & Beverage Brands
    • Newsletter
    • Current Issue
    • Archives
    • Subscribe
    • Want More?
    • Privacy Policy
    • Survey And Sample
  • Helpful Links
    • Dairy 100 List
    • Dairy Plants USA Database
    • Dairy Prices
    • Interstate Milk Shippers List
    • Milk Pasteurization: The Effects of Time and Temperature
    • National Conference on Interstate Milk Shipments
    • Pasteurized Milk Ordinance
    • Standards of Identity for Dairy Products
  • Multimedia
    • Videos
    • Podcasts
    • Behind the Scenes
    • Galleries
    • Periodic Table of Dairy Foods
    • Monthly Poll Question
    • Dairy Facts & Stats
  • Exclusives
    • Best of 2014
    • Best of 2013
    • First Half Favorites: 2013
    • Best of 2012
    • 2016 Dairy 100
    • 2015 Dairy 100
    • 2014 Dairy 100
    • 2013 Dairy 100
    • Dairy 100 Articles
    • 2016 State of the Industry Report
    • 2015 State of the Industry Report
    • 2014 State of the Industry Report
    • 2013 State of the Industry Report
  • Advertise
    • Monthly Promos

Copyright ©2019. All Rights Reserved BNP Media.

Design, CMS, Hosting & Web Development :: ePublishing