Analysis Milk
Milk dumping and rapidly declining US dairy exports
The US dairy export figures already showed hairline cracks and show a significant decline in April. This is according to figures from the American Dairy Export Federation (USDEC). In addition to stagnating dairy exports, parts of the Midwest are experiencing a milk surplus, which sometimes forces milk to be dumped.
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In volume, US dairy exports fell 13% to 185.476 tonnes of milk solids in April, compared to the same period last year. The underlying value even fell by 17% to $697 million. The decline is visible across the entire product spectrum. With a decrease of 15%, the largest decrease is due to whey powder. The decline is clearly a trend break, because these are the worst export figures in more than four years.
The cause of this is a lack of demand on the global market. China in particular buys significantly fewer volumes. Although the country has lifted corona rules for some time, Chinese consumers are reluctant to spend money. In addition, the Chinese dairy production shows growth figures. Chinese dairy imports in 2023 will be more than 20% lower than last year.
Milk dumps in Midwest
Meanwhile, production capacity in the American dairy sector is running at full speed. In some places, supply is greater than demand. In the Midwest, with large dairy states such as Michigan, Minnesota and Wisconsin, dairy farmers are therefore sometimes forced to dump milk. This is partly because a Hastings creamery factory has been shut down by the authorities for a period of six weeks. This is due to violations with waste water.
This produces distressing images on social media of dairy farmers spreading milk on their land. There are also too few sales opportunities on the spot market. Bridging long transport distances is difficult to organize or simply too expensive.