• May U.S. dairy exports

• USDEC highlights SEA opportunity

• Market Summary: GDT down across the board
• Member input needed on Colombia safeguard investigation

• Castaneda chairs ATAC

• Letter supports Deputy USTR confirmation

• Central American nontariff barriers

• Q&A doc on EU certificate

• Update: Relaxed import regs due to COVID

• Export Guide updates for June

• COVID-19 update: Indonesian rush on milk

• Darigold plant emphasizes sustainability

• Company news: Glanbia, Ornua, Saputo

 

Milk powder, whey drive U.S. dairy exports in May
Ingredients propelled overall U.S. dairy exports to a near-record month in May, with NFDM/SMP and whey products leading the way. May volume (milk solids equivalent) increased 12% over the previous year, while value jumped 18% to $689.9 million.

Through the first five months of 2021, export volume was up 14% and value grew 13% to $3.14 billion. Over the past three months alone (March-May), U.S. dairy export value was $2.07 million. With the exception of March-May 2014 when U.S. dairy exports were $2.12 billion, that’s the highest three-month export value ever.

NFDM/SMP record
Global demand and favorable pricing continued to drive U.S. sales in May. NFDM/SMP volume hit 88,729 MT (+9,566 MT vs. the previous year). That’s the most NFDM/SMP the United States has ever shipped in a single month, topping the 86,532 MT exported in March of this year. Strong gains to Mexico (+6,752 MT), the Middle East/North Africa (+5,994 MT), and China (+2,973 MT) paced the growth.

Total U.S. whey exports in May were up 28% (+12,373 MT). China continues to lead all whey buying. U.S. whey shipments to China in May rose 41% (+7,443 MT) compared to the previous year. Sizable gains to Vietnam (+1,785 MT) and Thailand (+1,095 MT) also supported growth.

May saw record shipments of high-value WPC80+, as exports reached 6,254 MT. U.S. suppliers recorded significant gains across a broad geography: China +342 MT, the UK +335 MT, South Korea +315 MT, Brazil +240 MT.

For a complete run-down of May U.S. dairy exports, including a look at why cheese shipments fell 13% vs. the previous year, read the U.S. Dairy Exporter Blog post, “Dairy exports show few signs of slowing in May,” and download the Latest Month Trade Data Summary. Also, go to the U.S. Export Data link under Research & Data at usdec.org and experiment with the interactive charts.

 

USDEC spotlights U.S. dairy export opportunity in Southeast Asia
Anoo Pothen, director, consumer insights, Southeast Asia office, and Vikki Nicholson-West, senior vice president, Global Ingredients Marketing, will reinforce USDEC’s role as the leading authority on U.S. dairy trade at next week’s virtual Dairy Experience Forum hosted by New England Dairy. The conference, “A Disruptive Forum on Today’s Consumer and Opportunities in Dairy,” will bring together stakeholders from across the supply chain—from U.S. dairy farmers to processor to retailers—to learn about the rapidly changing food and beverage landscape and dairy demand drivers.

In a pre-recorded session, Pothen will highlight opportunity areas to grow U.S. dairy trade in Southeast Asia, exploring learnings and insights gained through USDEC research and in-market engagement via activities run through the U.S. Center for Dairy Excellence in Singapore. Nicholson-West will join for a live Q&A after the session.

The forum takes place July 13 from noon to 5:00 p.m. ET. For more information, including links to the full agenda and registration, go to the Dairy Experience Forum page. In addition, see the popular infographic, “U.S. Dairy Reaches New Heights in Southeast Asia,” to get an at-a-glance look at U.S. dairy performance in the region. To download, go to the U.S. Center for Dairy Excellence web page and scroll down to the “Why Southeast Asia?” link.

GDT down across the board
The Global Dairy Trade (GDT) Price Index fell for the sixth straight event on July 6, but this time felt different than the previous five. That was primarily due to the size of the decline—3.6%—which was larger than the previous five auctions combined. Futures markets predicted declines in powder, butterfat and cheese, but not the level of declines we ended up seeing.

China continued to dominate buying, but Chinese demand is seasonally lower in July, and neither China nor any other region felt the need to pay the premium prices that commodities have commanded for much of the year. Middle East demand was down across all products except AMF. Inventories appear sufficient for the time being.

The average SMP price fell 7% to US$3,126/MT, its lowest level since Jan. 5. The percentage decline was the worst since March 2020. Prices fell across all contract periods, and volumes were flat or down for all regions, compared to the previous year, including China.

Cheddar plunged 9.2% to US$3,949/MT, its lowest price of the year. (With block cheddar spiking on the CME over the past week-plus, the Oceania-U.S. cheddar price gap is quickly narrowing).

WMP fell 3% to US$3,864/MT, influenced in part by Fonterra Co-operative Group reducing offer volumes by 9,240 MT for auctions between August 2021 and January 2022.

Butter fell 3.2% to US$4,458/MT; and AMF decreased 0.9% to US$5,632/MT.

EU milk deliveries to rise, cow numbers fall
The European Commission’s latest Short-Term Agriculture Outlook expects the bloc’s 2021 milk production to rise 0.8% in 2021 after a slow start to the year. The report projects May-June output will grow 2%, with monthly gains tapering off to 1.5% through year-end. At the same time, the EU dairy herd could drop by nearly 1%, the report states.

Download USDEC pricing app
Price trends are always at your fingertips. All you need to do is download the USDEC Commodity Prices Finder app, a mobile resource for tracking a variety of USDA dairy commodity prices. It is available at the Apple Store for iOS devices and Google Play for Android.

If line is trending up, currency is strengthening vs. U.S. dollar (U.S. dollar is weakening). This is favorable for exports, because it increases import purchasing power. If line is trending down, currency is weakening vs. U.S. dollar (U.S. dollar is strengthening).  This is unfavorable for exports, because it decreases import purchasing power. Currency exchange rates are calculated for Wednesday of each week. Source: Oanda.com.

 

USDEC continues efforts in opposing Colombia dairy safeguard investigation; member input still needed
On June 23, Colombia’s Ministry of Trade, Industry, and Tourism (MINCIT) formally notified the U.S. Government of its decision to initiate a safeguard investigation on U.S.-origin milk powder imports to Colombia (see this July 1 USDEC Member Alert). The investigation intends to determine if the increase of U.S. dry milk imports represents a threat to Colombia's domestic dairy sector.

The dairy products subject to this investigation are classified under the HS Codes 0402.10.10.00, 0402.10.90.00, 0402.21.11.00, 0402.21.19.00, 0402.21.91.00, 0402.21.99.00, 0402.29.11.00, 0402.29.19.00, 0402.29.91.00 and 0402.29.99.00.

USDEC fighting back
USDEC’s Trade Policy team, working with the Market Access & Regulatory Affairs team, met with USDA’s Foreign Agricultural Service last week to urge the U.S. government to engage the Colombian government in opposition to any potential safeguard. We will be reaching out to seek the support of Colombian buyers opposed to any safeguard as well. And we have sought the support of a law firm in Colombia to help with the legal process as well as our engagement at the political level.

We are also continuing efforts to make the U.S. government—at all political levels—aware of the problem and to emphasize the importance of preserving access to the market.

Member input needed
We also need your help. We are asking members to fill out the questionnaires issued by Colombia's Ministry of Commerce, Industry and Tourism (MCIT), Directorate of Foreign Trade. The questionnaire for exporters can be found here. Questionnaire information for importers can be found here and here.

In addition, we are asking members to submit information directly to the Colombian government (as well as to USDEC) on all shipments sent to Colombia from 2018 to 2021. All tonnages should be converted into liters and any information sent should be in Spanish. All information shared with USDEC will be handled with absolute confidentiality.

All information must be submitted by July 12, 2021. At this point, due to time constraints, we recommend that companies do not pursue a consular certification to submit the exporter questionnaire. Submissions can be made via email to the following addresses: ccamacho@mincit.gov.co; lmolina@mincit.gov.co; and info@mincit.gov.co.

Background
Colombia has indicated that it does not intend to launch automatic, provisional safeguards and that the safeguard investigation will be conducted in line with Chapter 8, Section A of the U.S.-Colombia Trade Promotion Agreement. Colombia has also indicated its intent to follow the provisions within its 2010 domestic Decree 1820, which specify timelines related to safeguard investigations and outlines the process for interested parties, including the U.S. government and the U.S. dairy industry, to submit comments and evidence related to the investigation.

The full text of MCIT’s notice and public file that contains the documents related to the investigation (in Spanish) may be found here.

For further information on this safeguard investigation, please contact Dr. Samuel Crowell, director of agricultural affairs, Office of the USTR, at 202-881-8992 or via email at Samuel.L.Crowell2@ustr.eop.gov. For agricultural-related questions, please contact Tacarra Birmingham of USDA FAS at 618-207-1712, or via email at Tacarra.Birmingham@usda.gov.

Castaneda elected chair of ATAC on Animals and Animal Products
Jaime Castaneda, USDEC’s Executive Vice President for Policy Development and Strategy, was elected chair of the USDA/USTR Agricultural Technical Advisory Committee (ATAC) on Animals and Animal Products. Castaneda leads a committee of 34 industry and trade association representatives from diverse livestock, poultry, seafood, union representatives and academia backgrounds who provide trade policy and technical advice to the U.S. Trade Representative and the U.S. Secretary of Agriculture. This position is critical to ensure that the interests of America’s dairy producers, processors and manufacturers are well positioned to provide critical guidance on technical and policy trade issues to the Biden Administration.

Letter supports Jayme White appointment as deputy USTR
USDEC and NMPF sent a joint letter to Senate majority and minority leaders Chuck Schumer (D-N.Y.) and Mitch McConnell (R-Ky.) expressing strong support for the confirmation of Jayme White as Deputy USTR for the Western Hemisphere, Europe, the Middle East, Labor and Environment. The letter cites White’s “vast experience and tenure working with agricultural export stakeholders,” including his extensive efforts to ensure U.S. trading partners lived up to their trade obligations and to ensure trade negotiation transparency.

The Deputy USTR position is particularly important in today’s challenging trade climate. USDEC and NMPF urged “swift Senate confirmation to ensure this key role does not remain vacant while our trade competitors outpace the U.S. in securing favorable market access terms around the world.”

Comments seek solutions to CAFTA-DR nontariff barriers
USDEC and NMPF submitted comments to the Office of the U.S. Trade Representative in response to the agency’s request for input identifying trade challenges within the Central America-Dominican Republic Free Trade Agreement (CAFTA-DR) region.

The comments focus on three actions USTR could take to solidify and improve access for U.S. dairy exports to Central America that would strengthen our trade relations.

• Stronger protections for generic terms. Building upon the precedent set in the USMCA, USDEC urges the creation of a mutually recognized list of generic terms to be protected in the future from bad-faith geographical indications (GI) applications.
  
  
• Plant registration process changes in Costa Rica. Costa Rica’s lengthy and redundant plant registration process puts U.S. exporters at a competitive disadvantage. A Costa Rican proposal to the WTO this year to formalize the requirements already in place has the potential to further complicate matters. USDEC and NMPF’s comments instead support an audit in which the U.S. system is evaluated and a representative sample of plants inspected rather than plant-by-plant inspections.
  
  
• One-step filing for product registrations. Rather than filing for product registration in each of the countries in the region (which is the current requirement), USDEC and NMPF urge the establishment of a system that allows mutual recognition of products produced outside the region so that a product only needs to be registered in one of the five countries.

The comments conclude that USDEC and NMPF “look forward to providing support to the interagency effort to resolve these issues to ensure that the flow of U.S. dairy exports continues unimpeded to these valuable markets.” To read the complete comments, click here.

New Q&A document provides answers on EU certificates
The MARA team has developed a Q&A document and posted it in the Hot Topics page of usdec.org to address member questions received over the past few months on the new EU health certificates scheduled for implementation on Aug. 21, 2021. As noted in a Jan. 4 USDEC Member Alert, the EU has issued new certificates that include several new animal health attestations, some of which do not fully align with the U.S. system, creating the possibility for market closure. The Q&A document reviews the new requirements as well as ongoing efforts to identify a path forward.

Relaxation of import requirements due to COVID-19
The MARA team has updated its running list of relaxed import requirements due to the COVID-19 pandemic. That list is accessible on the Hot Topics page under the Market Access tab at usdec.org.

Australia, Colombia and Taiwan have extended the dates by which digital copies of health certificates may be submitted until the original can be presented. The new dates are June 30, 2022 (Australia); Aug. 31, 2021 (Colombia); and Dec. 31, 2021 (Taiwan). USDEC will continue to monitor and update these dates should further extensions be granted.

The government of Kuwait has also advised that the delay in implementation of several cheese and labeling regulations will come to an end next year. Kuwait will begin enforcement of these regulations as of Jan. 2, 2022.

USDEC updates 29 sections in Export Guide in June
The Market Access and Regulatory Affairs team updated 29 documents in the USDEC Export Guide in June. Some of the changes include:

Volume 1: Tariffs and Classification

• Morocco: Noted tariff increase on yogurt, dairy spreads and several cheese codes.
• UK: Noted increase in MFN quota for skim milk powder and decrease in U.S. quota for food preparations.

Volume 2: Import Requirements

• Egypt: Added details of the new single-window system and noted the implementation delay until Oct. 1, 2021.
• Korea: Listed requirement for new certificate from AMS starting July 1, 2021.
• UK: Noted delay in implementation of the new UK certificate, which will now be required for goods certified after Sept. 30, 2021.

Volume 3: Compositional Standards and Labeling

• Argentina: Updated contaminants in most documents and microbial limits in cheese and sour cream.
• China: Updated Deproteinized Dairy Mineral Lactose Powder Standard; added table of allowable alternate names to identify permeate in the ingredients list.
• Thailand: Updated information on serial numbers.

Every month, USDEC’s Market Access team emails a list of guide updates to interested members. If there is anyone at your company who should be included on the distribution list for that email in the future, please contact Jessica Smith at jsmith@usdec.org. (USDEC staff)

COVID prevention triggers run on Bear Brand milk in Indonesia
Indonesian consumers, seeking some protection against the Delta variant sweeping through the country, surged to grocery stores this week after multiple social media posts carried rumors that Nestle’s Bear Brand milk was an effective deterrent to COVID-19. As demand for Bear Brand spiked, many resellers quintupled prices from the equivalent of about 80 cents a can to around $4.60 a can.

Indonesian medical officials quickly tried to correct the rumors, noting that Bear Brand provides the same essential nutrition of other milk brands and does not kill the virus.

Indonesia also implemented tighter Emergency Community Activity Restrictions through July 20 for hotpot regions, requiring all non-essential personnel to work from home, limiting hours and capacity at supermarkets, and limiting foodservice to delivery/take-out.

The situation illustrates what’s going on in many countries with insufficient vaccine supplies, rising new case and death numbers, and increasingly anxious populations. Similar work-from-home, dine-in and other restrictions continue in Thailand, Vietnam, Malaysia and elsewhere. Japan reinstated a state of emergency in Tokyo after lifting it less than three weeks ago and is allowing no spectators for the Olympics. South Korea delayed a plan to loosen social distancing restrictions after a new cluster of infections and the spread of the Delta variant.

Vaccines coming
Vaccine distribution is slowly improving in some key regions like Japan and the Philippines. Some countries, like South Korea and Colombia, are implementing new approaches to boost their vaccine supply.

South Korea is partnering with Israel on a vaccine exchange program under which Israel will provide doses of Pfizer-BioNTech that are nearing expiration. South Korea expects the plan will allow the country to reach its goal of at least one jab for 70% of its population earlier than its original target date of November.

In Colombia, a group of more than 5,000 private-sector businesses are collaborating to acquire more than 3.5 million doses to supplement government efforts.

The UAE passed the Seychelles as the world’s most vaccinated nation. Malaysia expects to receive more than 14 million vaccine doses this month, allowing it to accelerate vaccine distribution (as of July 5, a little less than 7 million Malaysians had received their first dose).

The UAE and Indonesia approved the Moderna vaccine, expanding their treatment options. Singapore aims to have two-thirds of its population fully vaccinated by Aug. 9, the country’s National Day holiday.

Stimulating economic growth
Efforts to revive economic growth while limiting the spread of the Delta variant continue around the world. Two examples from Southeast Asia:

• Thailand, where tourism accounts for around 12% of the national GDP, started its Phuket “sandbox” pilot program, reopening the vacation island to fully vaccinated foreigners. With proof of vaccination and multiple tests required during the visit, guests are free to move about the island with no quarantine or other restrictions. Visitors are allowed to travel elsewhere in Thailand after 14 days on Phuket, where more than 70% of residents and workers are fully vaccinated.
  
  
• In Vietnam, hundreds of thousands of workers are sleeping at factories to ensure that economic progress continues (in the form of manufacturing goods for export). The Vietnamese government has included factory workers among those prioritized for vaccines. (USDEC offices in China, Japan, Mexico, Middle East/North Africa, South America, South Korea, Southeast Asia and Vietnam; Bloomberg, 7/6/21, 7/5/21; Mashable SE Asia, 7/6/21)

New Darigold protein, butter plant places heavy emphasis on sustainability
Darigold is building a new $500-million protein and butter operation in Pasco, Wash., with a sharp focus on sustainability and stewardship. The 400,000-sq.-ft. plant will feature a variety of technologies and conservation strategies that—combined—could mitigate more than 300,000 MT of carbon dioxide equivalent per year.

Anaerobic digestion technology—part of on-site wastewater treatment—will extract methane for use as a natural gas substitute. Equipment will feature heat and energy recovery features. The facility’s infrastructure is designed to accommodate the transition to electric vehicles in the future. Situated in the Port of Pasco on the Columbia River, the plant will have access to rail and barge facilities and will slash the distance trucks travel for milk pickups and deliveries by 5 million miles annually.

Darigold CEO Stan Ryan called the project a “future-forward investment in a next-generation dairy facility.”

Glanbia gets green light—again—for Belview cheese plant
Ireland’s High Court dismissed a challenge to a joint-venture cheese plant planned by Glanbia Ireland and Dutch dairy processor Royal A-Ware. Irish environmental watchdog An Taisce has held up the project with multiple court challenges, citing projected carbon emissions and negative impact on water quality.

The facility will produce 50,000 MT per year of gouda cheese for export and is part of Glanbia’s post-Brexit diversification strategy aimed at reducing dependence on sales of cheddar to the UK. Glanbia originally expected to complete the plant in 2022, but that date has been pushed back at least until 2024. An Taisce said it stands by its criticism of the project but would review the latest High Court judgment and assess its options before making any further comments. (Agriland, 7/2/21)

Saputo expands with UK acquisition
Canada’s Saputo is paying £23 million (about US$32 million) to acquire UK cheesemaker Wensleydale Dairy Products. Wensleydale operates two facilities in North Yorkshire, from which it manufactures, markets and distributes a variety of specialty and regional cheeses around the world. The company will become part of Saputo’s Dairy Division (UK) under its Europe Sector. (Company reports)

Ornua signs nutritional powder partnership with Aymes
Ornua Ingredients Europe inked a long-term supply partnership with Aymes International, a provider of oral nutritional supplements and clinical nutritional products. Under terms of the agreement, Ornua will manufacture “several million” 57g sachets of Aymes Shake powder at its facility in Leek, UK. Ornua added a new £500,000 (about US$690,000) single-sachet packing line as part of the deal. Aymes said it expects the partnership to develop over time with new products and line extensions. (Company reports)

A2 completes Mataura Valley acquisition
New Zealand’s Overseas Investment Office approved a2 Milk Co.’s NZ$270-million acquisition (about US$190-million) of a 75% stake in Mataura Valley Milk. China Animal Husbandry Group, a subsidiary of China National Agriculture Development Group, will retain a 25% share.

The deal broadens a2 Milk’s nutritional products capacity, diversifies its geographic reach and strengthens relationships with key partners in China (China National Agriculture is also the parent company of a2’s logistics and distribution partner in China). A2 also has strategic relationships with Synlait Milk and Fonterra Co-operative Group. The company previously stated that it plans to establish canning and blending capacity at Mataura’s plant in Gore on New Zealand’s South Island, creating a fully integrated infant formula facility. (Company reports; Australian Financial Review, 7/5/21)

Company news briefs
Brazilian dairy processor Betania opened a new milk powder plant in Morada Nova, Ceará. The plant, which cost R$50 million (about US$10 million), can process 206 MT of raw milk per day into 200g and 800g packages for consumers and 25kg bags for industrial customers . . . According to McDonald’s, China still has plenty of room for fast-food expansion. McDonald’s China expects to open 500 new stores in 2021, its most ambitious year of expansion in the company’s 30-year history in the country. This comes after opening more than 480 new Chinese units in 2020 despite the pandemic . . . Illinois-based co-op Prairie Farms Dairy is reportedly shutting down its Homewood, Ala., milk plant, all branches and substations across Alabama, and four branches in Georgia. The company did not elaborate on the reason for the closures. (USDEC South America office; USDEC China office; WSFA-12, 7/1/21)

• Ingredients drive U.S. dairy exports to a near-record month in May
• In radio interview, Krysta Harden shares her optimism for U.S. dairy exports
• The Mid-Year 2021 Global Dairy Business Review
• Video: F&B formulators increasingly tapping into dairy proteins (retweet)