U.S. agricultural exporters overcame some of the impediments that plagued them in recent months, helping create a resurgence of foreign sales in February.
Dairy products
Despite having one fewer day in February 2021 compared to last year and U.S. suppliers still facing shipping delays and other challenges, U.S. dairy product exports surged in February, according to a monthly update from the U.S. Dairy Export Council (USDEC).
- Volume basis: On a milk solids equivalent basis, February 2021 exports were jumped 15% compared to the same month a year ago. February’s growth was driven primarily by a resurgence in nonfat dry milk (NFDM) skim milk powder (SMP) to Mexico and Southeast Asia and whey products to China.
February’s NFDM/SMP export data was a surprise after forecasts shipping frustrations common during November-January were expected to continue. Despite that, milk powder exports grew substantially, up 31% over February 2020. Looking ahead, this suggests that if U.S. exporters can secure booking with a carrier, there will be opportunities to grow exports.
U.S. exports of cheese topped 30,000 metric tons (MT) since August 2020. Adjusting for Leap Day, February 2021 U.S. cheese exports grew 1.1% over February 2020. USDEC cited more competitive U.S. cheese pricing since December and progress in keeping COVID-19 in check in key markets in East Asia and the Middle East (and subsequent improved food service traffic in those markets) are creating a more optimistic outlook for U.S. cheese.
U.S. whey exports rose 29% in February, with China leading the way, up 159% compared to February 2020.
- Value basis: At $565.5 million, the value of February exports was up about 7% from the same month a year earlier and up about $100 million from February 2019.
CWT-assisted exports
The National Milk Producers Federation (NMPF) estimated first-quarter 2021 Cooperatives Working Together (CWT) program-assisted sales totaled about 11.8 million pounds of American-type cheeses, 8.8 million pounds of butter, 3.6 million pounds of anhydrous milkfat, 13.5 million pounds of whole milk powder and 4.4 million pounds of cream cheese. These sales are the equivalent of 540 million pounds of milk on a milkfat basis.
Dairy heifer exports: Short-term surge
Large shipments to Pakistan and Vietnam and smaller sales volumes to a growing list of diverse geographic markets boosted February’s exports of dairy replacement heifers. The USDA estimated 4,741 head were exported during the month, the highest total in 13 months. Of those, 2,075 were shipped to Pakistan and 2,193 went to Vietnam. Qatar was the destination for 231 heifers in February, followed by Mexico (101), Canada (73), Nigeria (41) and Denmark (27).
Tony Clayton, Clayton Agri-Marketing Inc., Jefferson City, Missouri, expects the February numbers to be a high point for cattle exporters and is less optimistic as the year progresses. He said he sees a shift in market dynamics.
On the U.S. supply side, many U.S. dairy heifer growers have exited the international marketplace due to costs and uncertainty. Limited inventories of bred heifers are in the hands of dairy producers who plan to use them in their own operations.
On the demand side, foreign buyers are misinformed that all cattle in the U.S. are registered, have high genomic numbers, are bred to sexed semen and are available at all times. “We continue to tell buyers they must start planning shipments of pregnant cattle six to seven months ahead of time,” Clayton said. “With the short inventory of Holstein heifers bred to Holstein sires and [continued] COVID travel concerns, I see the glass half empty of dairy exports.”
Hay exports rebound too
Hay export activity has picked up despite shipping challenges, according to Christy Mastin, sales representative with Eckenberg Farms, Mattawa, Washington. She expects the sales’ trendline to continue to improve next month, even though port congestion and vessel wait times remain problematic.
At 210,193 metric tons (MT), February 2021 alfalfa hay exports were the second-highest monthly total since August 2020 and nearly equal to February 2020. Sales to China rebounded, up 47,700 MT from January and again topping 100,000 MT for the month.
At 106,116 MT, February 2021 exports of other hay were even with a year ago. Nearly 65% (69,000 MT) of the month’s sales went to Japan, with shipments to other major markets steady.
U.S. ag trade balance
Depending on what definition you use, the U.S. trade surplus was either $2 billion or $2.3 billion in February. The difference: The USDA, in coordination with the U.S. Department of Commerce, adopted the World Trade Organization's (WTO) internationally recognized definition of "agricultural products" for 2021.
By the WTO definition, February exports totaled about $13.9 billion and imports totaled $11.9 billion. Under the historical definition, February U.S. exports totaled nearly $13.5 billion and imports totaled about $11.2 billion. That yields a year-to-date ag trade surplus of either $4.6 billion or $5.3 billion.
Other trade news
Here’s a look at other issues affecting U.S. dairy and agriculture:
- In March, NMPF staff asked congressional offices to address the issue of vessel operating common carriers (VOCCs) reportedly returning to their original ports with empty containers instead of accepting U.S. agriculture and forestry exports with the Federal Maritime Commission (FMC). Members of Congress had previously sent letters to the FMC concerning the problem.
- In a letter to new U.S. Trade Representative (USTR) Ambassador Katherine Tai, NMPF and USDEC officials sought greater enforcement of U.S. trade rules and negotiating terms and conditions for America’s exports to foreign markets. Specifically, USDEC and NMPF outlined priorities for USTR to enforce the U.S.-Mexico-Canada Agreement, restore export growth to China, counter European Union efforts to impede competition, tackle nontariff barriers that limit U.S. dairy exports and successfully conclude negotiations with new trading partners, including the United Kingdom, Kenya and Japan.
- The Consortium for Common Food Names (CCFN) applauded the USTR’s prioritization of common name restrictions as a primary trade barrier in their 574-page 2021 National Trade Estimate (NTE) report.
- As noted above, the rebuilding of China’s swine herd is one reason for increased U.S. dairy exports. Now, however, there’s concern the number of cases of African swine rever (ASF) has been on an upswing in recent months. Two specific strains that have recently been detected reportedly are less virulent than previous strains, which makes them more difficult to detect and thus easier to spread between pigs. This is particularly bad for piglets born with weakened immune systems.
- While far less hay moves from the East Coast, the Georgia Ports Authority Board approved capital improvement projects that will increase the Port of Savannah’s container capacity by 20%. Agricultural products represent about 60% of the exports going through that port.
- One gateway for hay exports is expanding in the West. In partnership with the Union Pacific Railroad, Savage, a transportation, logistics and materials handling company, is constructing an intermodal rail terminal in Pocatello, Idaho, with operations expected to begin operation by the middle of 2021. According to a press release, the railport will facilitate movement of containerized hay and other agricultural commodities to ports in Tacoma and Seattle, Washington.
