Aside from the data, USDEC says numerous exporters have talked of lost contracts, expectations of losing contracts and adjusting prices lower to hold onto market share.
U.S. dairy exports in July were seasonably lower and the lowest since January, but they were still ahead of year-ago levels.
Suppliers shipped 170,100 tons of milk powders, cheese, butterfat, whey and lactose, up 11 percent over July 2017. Those exports were worth $434 million, a 3 percent increase over a year earlier, U.S. Dairy Export Council reported.
But the data also seem to show some effects from retaliatory tariffs on U.S. dairy by China and Mexico, with a big hit to whey and cheese exports to China and a slight drop in cheese exports to Mexico — the top market for U.S. cheese.
Alan Levitt, USDEC vice president of communications, said it’s tough to draw firm conclusions on the effects of the tariffs based on a single month’s data.
Those lower exports could be a function of the normal month-to-month fluctuations of tactical buying. For instance, buyers could have stocked up in previous months ahead of the new tariffs, he said.
It’s also noteworthy that whey prices are up more than 50 percent since March, which could have given buyers pause, he said.
“But that said, just about all the product lines and markets affected by the new tariffs saw a decline in July, so we would theorize that the tariff effect is real,” he said.
Whey, skim milk powder and cheese are the main products affected by China’s tariffs. Whey and cheese exports to China in July were down 26 percent and 56 percent, respectively, while skim milk powder did OK, he said.
“Meanwhile, lactose, which is not hit with new tariffs, continued to flourish (up 53 percent),” he said.
The only product directly affected in Mexico is cheese, and cheese exports to Mexico — which were up 7 percent in 2017 — were down 1 percent in July.
Meanwhile, skim milk powder exports to Mexico were up 31 percent, butterfat was up 345 percent, lactose was up 42 percent, whole milk powder was up 105 percent and fluid milk was up 23 percent.
“So Mexico was still buying from us, just not as much cheese,” he said.
That could have been because buyers bought ahead in June before the new tariffs were to go into effect. U.S. cheese exports to Mexico in June were up 43 percent, he said.
Aside from the data, USDEC has heard from numerous U.S. exporters stories of lost contracts, expected lost contracts when buyers can shift suppliers and efforts to adjust pricing to retain business given the importance of the market, he said.
“Going forward, I would expect the trend to continue,” he said.
In China, that would mean a loss of sales on the affected products and still some whey exports, but much less than before, he said.
“There’s a possibility China could add lactose to the tariff list. And if that’s the case, I would expect a similar trend as whey — still moving some volume, but less than before,” he said.
“On Mexico, we still have a competitive advantage, even with the retaliatory tariffs, and I would hope U.S. exporters would continue to maintain most if not all of their volumes there,” he said.
Source: capitalpress.com
