U.S. dairy exports faced a sluggish start in 2024, marking their 12th consecutive year-over-year (YOY) monthly decline in January.
The persistent softness in global economic growth continued to impact consumer purchasing in key markets, causing a 5% drop in U.S. dairy export volume, measured in milk solids equivalent (MSE), compared to the previous January. The export value also declined by 16% to $597.1 million.
Despite the overall challenging scenario for global dairy demand, there were some positive developments in the new year.
The U.S. Dairy Export Council (USDEC) reported a record-breaking performance in January cheese shipments, with a notable 13% increase in U.S. cheese exports, reaching 38,299 MT. The boost was primarily fueled by strong demand across Latin America, including Mexico, Central America, South America, and the Caribbean.
Additionally, high-protein whey exports (WPC80+) saw a sixth consecutive month of year-over-year growth, with January volume surging by 25%. The increase was particularly driven by substantial growth in China, the Netherlands, India, and Southeast Asia, offsetting declines in Japan and Brazil.
On the flip side, low-protein whey experienced its 12th consecutive YOY decline, albeit the smallest decrease in the streak. Weak U.S. milk production contributed to challenges in NFDM/SMP production, leading to a decreased availability of U.S. products for export.
Notably, nonfat dry milk/skim milk powder (NFDM/SMP) exports faced a setback, falling 14% in January, with shipments to Mexico, the largest market, declining by 22%. U.S. suppliers will likely encounter difficulties matching the robust purchasing levels witnessed in the first half of 2023.
Shredded cheese emerged as a standout performer, achieving record exports in January, with shipments doubling compared to the previous year. The persistent strength in shredded cheese exports was attributed to increased demand, especially for pizza, in key markets such as Japan, Australia, Guatemala, and Mexico.
While other cheese varieties experienced more modest growth, cheddar cheese exports declined by 41%, primarily due to decreases in shipments to Japan, Mexico, and Australia. However, the drop in cheddar exports did not offset the gains in shredded cheese, resulting in an overall record for the cheese category in January.
In the whey category, U.S. exports of low-protein whey saw a 5% decline in January, with variations among its three components. Dry whey exports rose for the first time in a year, driven by increased shipments to Japan and Korea. WPC exports also increased by 4%, mainly due to higher demand from Mexico and Southeast Asia. However, modified whey faced a 17% decline, with lackluster Chinese demand playing a significant role.
Despite the challenges, the improvement in dry whey exports and the continued demand for high-protein whey products provide a glimmer of hope for the U.S. dairy industry. The report suggests that ongoing efforts to make U.S. dry whey more competitive globally could positively impact international market share.
