Despite a down turn in dairy exports last July and a miserable fourth quarter, U.S. dairy exports finished the year up 25% with records sales of $3.83 billion. Export volumes totaled 10.8% of U.S. milk production on a solids basis, also a record.
USDEC's 2008 annual report focuses solely on last year's performance, and is mute on the coming months. The drop in export demand and sales is largely responsible for the massive build-up of stocks this year, and the crash in dairy prices to support levels.
In the first half of 2008, export sales grew an astounding 74% over the same period in 2007. In fact, according to the report, first half sales of 2008 were greater than the total sales of 2006.
In July, however, severe food inflation and crashing oil markets put the brakes on sales. The melamine dairy crisis in China resulted in exports to that country plummeting as much as 80%. By the fourth quarter of 2008, U.S. dairy exports dropped 29% compared to the same period in 2007. This was the first negative quarter in dairy export sales since January - March 2006.
In 2008, the U.S. exported 55% of its lactose production, 49% of its whey proteins, 47% of its non-fat dry milk and skim milk powder, 12% of its butter and 3% of its cheese.
The U.S. share of Mexico's cheese import market also grew to 60% and powder sales rose 72%. Last year marked the end of a 15-year phase-out period of Mexican tariffs, negotiated through the North American Free Trade Agreement (NAFTA).