Quick Bites: More U.S. Whey To China

• U.S. dry whey exports to China got a big boost in May with volume topping 18 million pounds. That was up from just 3 million pounds in May 2019 and counts as the biggest outbound movement to China in nearly two years. Year-to-date through May, U.S. whey exports to China reached 64 million pounds, up 64% (+25 million pounds) from last year.
  
• Why the sudden bump? After African Swine Fever wiped out hog populations across the country in 2018 and 2019, China is looking to repopulate the domestic herd. Though ASF remains a key issue in Asia, increased biosecurity and containment efforts in China have knocked back the spread. And today, it needs more whey to meet demand for piglet feed.
  
• U.S. exporters are not the only players in the mix, though. Year-to-date through May, China whey imports totaled 481 million pounds – up 23% year-over-year. Sales from Europe accounted for 42% of that volume, while Belarus grabbed another 8% share.
• For now, China’s appetite for whey will likely keep expanding as it pushes to increase inventories to satisfy its growing herd, while also getting ahead of any potential future supply chain disruptions.
  

Today's Special

• Pop the sparkling wine … USMCA is official! After years of back and forth, barbs and reconciliations, the U.S.-Canada-Mexico Agreement finally entered into force on July 1.
  

• That’s good news from a dairy perspective. Mexico and Canada are the U.S.’s two largest dairy trading partners with roughly $2 billion in annual export sales over the past five years. In 2019 alone, total U.S. dairy exports reached $5.9 billion dollars. Exports to Mexico totaled more than $1.5 billion, accounting for 26% of U.S. dairy transactions. Sales to Canada made up another 11% of U.S. dairy exports in 2019 with shipments exceeding $667 million. Year-to-date through May 2020, sales to Mexico totaled $581 million and exports to Canada topped $276 million, down modestly year-over-year on a combined basis.
  

• Ultimately, the USMCA agreement should help to upgrade trade dynamics with these key North American trading partners. This agreement maintains duty-free status for U.S. dairy exports to Mexico – a key win for U.S. sellers – while increasing U.S. access for several goods – including fluid milk and cheese – into Canada over the next 13 years. It also updates sanitary and phytosanitary commitments, ensuring regulations are based on science and risk while improving transparency between the countries. Additionally, this agreement requires that Canada eliminate its use of Class 6 and Class 7 pricing schemes by early 2021, potentially helping to increase U.S. export competitiveness globally. 
  

• The finalization of USMCA brings needed closure to some of the lingering trade uncertainty that clouded the market in recent years. Of course, transparent implementation of USMCA’s dairy provisions, particularly those governing U.S. access to the Canadian market, will be critical if U.S. dairy is to enjoy all of the benefits contained in this agreement.
  

• For more information on USMCA or other ongoing trade relationships, please contact Becky Rasdall, IDFA’s Vice President of Trade Policy and International Affairs at BRasdall@idfa.org.
  

Something Sweet: The US Cheese Trade Minute