New Zealand helps put a spanner in US dairy export growth works

Increased competition from New Zealand in US dairy markets and via milk production helped put the brakes on US dairy export growth last year.

The US Dairy Export Council said weak global demand and increased
competition from New Zealand and the European Union resulted in a US dairy export decline of 7 per cent in milk solids equivalent on the previous year.

“The factors complicating US dairy export growth have been consistent most of the year: elevated inflation, disappointing economic growth in key export markets, particularly China, reduced demand for feed whey from China’s struggling pig sector, increased milk output from the EU and New Zealand and reduced whole milk powder purchasing from China causing New Zealand to shift its product mix and redirect exports to key US markets,” the council said.

US export value finished 2023 down 16 per cent on the previous year, at US$8.11 billion ($13.2b).

It was the second-largest value of all time, but down 16 per cent from the record 2022 year as volume and prices eased, the council said.

New Zealand dairying generated $25.7b in exports in 2023, which is one in every four export dollars the country earned.

US export suppliers posted volume gains in just two major product categories in 2023: high-protein whey (WPC+80) and lactose, the council said.

Full-year US WPC+80 export volume increased 18 per cent on 2022, rising to a record 75,848 metric tonnes, while lactose shipments lifted 5 per cent to a record 471,918MT.

“But beyond WPC80+ and lactose, positive year-end numbers were nowhere to be seen,” the council said in its latest blog report.

“Nonfat dry milk/skim milk powder fell 3 per cent (-24,570 MT); cheese dipped 4 per cent (-15,313 MT); low-protein whey dropped 20 per cent (-125,165 MT); butterfat slid 44 per cent (-44,795 MT). Milk protein concentrate, fluid milk and cream and whole milk powder fell 10 per cent, 7 per cent and 33 per cent, respectively, for the year.”

But there were some positive export signals late in the year, the council said.

US cheese exports posted a 4 per cent gain in November and a 1 per cent improvement in December, with “solid” volume increases in shipments to Mexico, China, Central America and the Caribbean.

US non-fat dry milk powder and skim milk powder shipments rose 1 per cent in December, the first year-on-year increase since last August. December shipments of these products to Southeast Asia jumped 23 per cent (3634MT), while volume to the Middle East and North Africa more than tripled by 1868MT.

“For Southeast Asia, it was the second straight monthly increase and an optimistic sign that demand in the number-two US market is on the road to recovery,” said the council.

US export sales of whole milk powder, New Zealand’s main dairy export, were down 33 per cent, or 12,882MT, in 2023 on the previous year.

New Zealand is also a major cheese exporter.

The council said heightened competition from New Zealand and the EU, along with inflation-related consumption declines in Korea and Japan, undercut US cheese sales to those East Asian countries.

US cheese exports to Japan, an important market for New Zealand, fell 15 per cent or 7155MT, while shipments to South Korea dived by 40 per cent, or 30,175MT.

More competitive pricing, “struggling” European milk production and expectations that Japanese and Korean demand for US cheese may be about to turn a corner painted a more hopeful outlook for 2024, the council said.

While US cheese exports fell in 2023, at 435,569MT, the shipments were the second-highest by volume ever posted in a single year.

Volume was driven mainly by a 41 per cent jump (39,959MT) in shredded cheese sales to meet food service demand, mostly to the US dairy sector’s main market, Mexico, but also to China. Shipments of shredded cheese to China lifted more than eight-fold by 5612MT, the council said.

Andrea Fox joined the Herald as a senior business journalist in 2018 and specialises in writing about the dairy industry, agribusiness, exporting and the logistics sector and supply chains.