• LCL cheese shipments to MENA
• Vilsack advances to full Senate vote

• California calls for port action
• Webinar: Cronobacter control in dry dairy plants

• Market Talk: NZ prices keep heading up

• Japan announces fiscal 2021 import plan

• January USDEC Export Guide updates

• Changes needed on EU dairy proposals

• Chinese testing of food for coronavirus

• COVID update: input from overseas offices

 

New service addresses LCL cheese shipping needs
One of the keys to overall U.S. cheese export success lies in the industry’s ability to offer less-than-container-load (LCL) services to international markets. LCL shipping opens the door to U.S. cheesemakers to export a broader range of U.S. cheese varieties, including artisan and other high-value products. That service has been a tough nut to crack, until now.

USDEC efforts to find an affordable commercial solution to LCL shipments have paid off. After talking last year with Angélique Hollister, USDEC senior vice president, global cheese marketing, as part of an endeavor to brainstorm solutions, SEAFRIGO has developed and launched a new, monthly, chilled sea-freight consolidation service from New York to Dubai. The intention, once the program takes off, is to increase frequency of the shipments to bi-weekly (and eventually weekly) as well as add further destinations.

SEAFRIGO is a leader in refrigerated logistics and a well-known vendor to many members.

“This is a win for the industry,” says Hollister. “SEAFRIGO really listened to what we needed and spent the time figuring out a workable long-term solution that allows U.S. cheesemakers to broaden their export range while remaining competitive.”

For more information, download a flyer outlining the service, a pricing sheet and an Excel spreadsheet showing a comparison of LCL sea shipping vs. air. For additional questions, please contact Hollister at ahollister@usdec.org.

Concurrent changes to programming
With a new commercial program in place, USDEC is phasing out its shipping assistance program to the Middle East/North Africa (MENA), which was launched three years ago to help U.S. companies overcome the cost disadvantages of LCL shipments.

USDEC is also discontinuing its MENA listing-fee assistance program. Both programs were considered temporary from the outset until USDEC found a commercial solution to LCL cheese shipments and until U.S. suppliers got their feet in the door in the region.

USDEC continues to offer robust retail programming in the area and the MENA team stands ready to assist members with finding customers, supporting product launches, conducting training and more. Contact Merle McNeil at mmcneil@usdec.org for more information.

Vilsack advances to Senate vote
The Senate Committee on Agriculture, Nutrition and Forestry voted unanimously to advance USDEC President and CEO Tom Vilsack’s nomination as USDA Secretary to a full Senate vote. Secretary Vilsack received bipartisan praise during his confirmation hearing on Feb. 2 (click here to watch a video of that hearing). At press time, a full Senate vote was pending.

California calls for immediate action on ports
Congestion at the Ports of Los Angeles/Long Beach appears to be worsening. The state of California contacted the Federal Maritime Commission (FMC) late last week asking regulators to take “immediate steps” to help agricultural exporters mitigate rising costs and delays, including the suspension or reduction of detention and demurrage changes and the cancellation of congestion surcharges.

Other developments in shipping over the past week:

• Reports state that the number of ships waiting for berths at L.A./Long Beach has grown to 40+ a day. For some, that wait may be up to two weeks.
  
  
• In December, less than 45% of container vessels arrived on time, according to SeaIntelligence Consulting. That is the lowest level since the group began tracking reliability in 2011 and almost 32 percentage points lower than the December 2019 rate.
  
  
• Some ocean carriers are reportedly shipping over 75% of their containers back to Asia empty to make sure they get there faster.
  
  
• The correlation between spot rates and contract rates is out of whack, with contracts running about 15% higher that spot prices would suggest. While that 15% overage should moderate in the months ahead, shippers should “prepare for permanently higher contract rates on the transpacific,” said SeaIntelligence.
  
  
• The FMC sent a letter to President Biden urging the administration to classify dockworkers as essential and prioritize vaccinations, warning that port issues might otherwise worsen.
  
  
• Indonesian dairy importers are seeing significant delays in dairy shipments from both the United States and Europe. But they attribute the slowdown to insufficient ship numbers at Singapore transfer points. (USDEC Southeast Asia office; Supply Chain Dive, 2/3/21; The Loadstar, 2/3/21; 2/2/21, 2/1/21, 1/29/21; Shipping Watch, 2/1/21)
  

Don’t miss webinar on Cronobacter control
A new webinar from the Innovation Center for U.S. Dairy will explore how to control Cronobacter, a ubiquitous and opportunistic pathogen, in dry dairy operations. Register here to join a distinguished lineup of industry experts on Feb. 12 from 10 a.m.-11:30 a.m. CST to gather insights on best practices for controlling the pathogen.

The speaker lineup includes Dave Cook, president, Commercial Quality and Food Safety Solutions; David Kedzierski, vice president, food safety and regulatory affairs, Agri-Mark; Sudeep Jain, director of quality assurance, Michigan Milk Producers Association; Rick Heiman, director of corporate hygiene at Dairy Farmers of America; Ron Thompson, director of food safety, education and technical services, Select Milk Producers; Karen McCarty, senior director of quality assurance at Agropur’s U.S. operations; Monty Bohanan, corporate manager of sanitation, Leprino Foods; and Les Smoot, senior advisor, office of food safety, at FDA’s Center for Food Safety and Applied Nutrition.

Cronobacter is often hard to control and eliminate from dairy facilities without adequate and specific programs. Further risks arise because dairy powders are often used without heat processing and are a potential source of contamination in finished products. “Best Practices for Controlling Cronobacter in Dry Dairy Operations” allows you to learn from the experts. The webinar includes a Q&A session with presenters and panelists.

 

Prices rise again at GDT
The Global Dairy Trade (GDT) Price Index rose for the sixth straight auction on Feb. 2, increasing 1.8% to US$3,614/MT. Strong demand from China remains the market mover, but there is growing belief that global port issues are contributing to the bullish climate. Buyers are ordering more and paying the price now to secure supply given shipment delays and uncertainty over when port congestion, equipment shortages and other logistical challenges will improve.

All product prices except for SMP (which was headed for a price correction according to NZX futures markets) increased at the auction: WMP, +2.3% to US$3,458/MT; cheese, +2.3% to US$4,178/MT; butter, +6.2% to US$5,028/MT; and AMF, +1.3% to US$5,463/MT.

WMP outperformed expectations, supported further by concerns about New Zealand milk production, which continues to feel the impact of La Niña weather patterns despite meteorologists’ predictions a month ago that the phenomenon’s effect was easing. The latest projections from the National Oceanic and Atmospheric Administration say that La Niña is likely to stick around through March, although New Zealand’s National Institute of Water and Atmospheric Research (NIWA) sees above-average rainfall on the North Island in the weeks ahead, supporting pasture growth.

Prices to encourage
At the start of February, pasture growth is indeed good in New Zealand and, encouraged by GDT strength, Kiwi dairy processors and banks are raising projected 2020/21 farmgate milk price forecasts. Citing strong milk powder demand from China and Southeast Asia, Fonterra lifted its forecast milk price range by NZ$0.20 to NZ$6.90-$7.50/kgMS. Synlait Milk, ASB Bank and Westpac raised their estimates by NZ$0.40-$0.80/kgMS.

But the upcoming Northern Hemisphere spring flush and COVID-19 uncertainty remain as potential headwinds. And the next GDT auction is set to take place during the Lunar New Year holiday, suggesting fewer buyers may participate in the event and demand may ease, at least temporarily.

U.S. in favorable position
With the strength of recent New Zealand commodity prices and U.S. milk production riding high, U.S. suppliers are currently seeing very competitive pricing against New Zealand. As of midweek, the price gap between NZ and U.S. cheddar was more than US$600/MT; the NFDM/SMP price gap was more than US$850/MT; and the butter difference was more than US$1,900/MT.

Year-end trade data later today
Keep an eye on your inbox for USDEC’s coverage of year-end trade data. The Foreign Ag Service is due to post the December numbers this morning. Check USDEC’s U.S. Export Data page later today for updated charts and analysis.

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.

Japan sets dairy tenders, announces fiscal 2021 dairy import volumes
Japan’s Ministry of Agriculture, Forestry and Fisheries (MAFF) announced initial expectations for dairy imports for fiscal 2021 (year ending March 31, 2022). MAFF lowered planned butter purchases to 6,400 MT (from 14,000 MT in fiscal 2020) and maintained NFDM/SMP volume at 750 MT (equal to fiscal 2020).

Those numbers are historically low: Japan’s overall planned dairy imports for fiscal 2021 (including whey products and AMF) are 137,341 MT (milk equivalent)—the lowest since fiscal 2013. The reason is fallout from COVID-19. Japan saw domestic butter and milk powder inventories rise last year as fluid milk was diverted to long-life manufactured products due to school closures and other pandemic-related problems.

In addition to announcing planned purchases, Japan’s Agriculture and Livestock Industries Corp. (ALIC) released a schedule of upcoming tender dates through May. Dates are as follows, all are SBS tenders:

• Feb 18: 700 MT of butter
• Feb. 25: 500 MT of butteroil
• March 18: 700 MT of butter
• March 25: 1,500 MT whey and modified whey
• April 15: 700 MT of butter
• May 13: 700 MT of butter
• May 18: 500 MT of butteroil

For more information, contact USDEC’s Japan office at usdecjapan@marketmakers.co.jp or (011) 81-3-3221-6410.

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.

 

January updates to Export Guide
Key updates to the USDEC Export Guide in January include:

Volume 1: Tariffs and Classification

• Mexico: Added new tariff codes and descriptions according to revised tariff schedule.
• United Kingdom: Added the UK as a new country reflecting its tariff schedule post-Brexit.

Volume 2: Import Requirements

• China: Added the workplan for COVID testing to China’s introduction (also see story on Chinese testing, disinfection rules below under “COVID Update”)
• Egypt: Updated legalization to indicate that the COVID reprieve has ended but copies are accepted until originals can be provided.
• India: Added the definition of “nutraceutical.”

Volume 3: Standards and Labeling

• Korea: Updated contaminants information in all standards.
• Turkey: Reviewed all documents; made changes to milk, cheese, infant formula and additives.

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)

USDEC seeks changes on potentially harmful EU regulatory proposals
USDEC’s Market Access team provided comments this week on two EU draft proposals that were open for public for comment but have not yet been notified to the WTO.

• Composite products exempt from official checks. The EU is proposing to eliminate the current 50% threshold for animal-origin ingredients in composite products that necessitates official checks at border control posts. Instead, the EU is proposing to only allow certain processed products to be exempt.
  
  USDEC urged the EU to reconsider removing this threshold since it subjects significantly more products to inspection. We also requested that the draft be notified to the WTO so trading partners may provide feedback.
  
  
• The EU issued an impact assessment document covering the creation of nutrient profiles, front-of-pack labeling, country-of-origin labeling, and expiration-date marking. The bloc proposed several options for each topic, ranging from status quo to significant modifications with the potential to negatively impact dairy exports to the EU and dairy consumption in the EU. USDEC suggested status quo on all proposals.

The Market Access team also reviewed WTO notifications for microbiological criteria in Colombia and additives in Taiwan and found no concerns with these proposals.

Update on Chinese testing, disinfection guidelines for food imports
China continues to modify and update policies aimed at minimizing the spread of COVID-19 through imported products and packaging. In the latest modification, published Jan. 25, the country introduced “Technical Guidelines for the Prevention and Control of COVID for the Imported Goods Manufacturing and Operation Entities.” The guidelines apply to businesses in China that handle imported goods, including food products and ingredients.

The rules aim to put a system in place wherein a nucleic acid test report and a disinfection certificate is passed along during each step in the supply chain. USDEC’s understanding is that the guidelines apply only to manufacturing and operation entities in China. The General Administration of Customs China (GACC) has issued NO protocols for nucleic acid testing and disinfection.

For more detailed information on the guidelines, see the USDEC Feb. 3 Member Alert, “China COVID-19 testing and disinfection certificate for products and packaging.” If you have any questions, please contact Eddy Fetzer at efetzer@usdec.org.

Coronavirus: the latest from USDEC overseas offices
A number of countries plan to start or accelerate inoculation programs this month as vaccine approvals advance and doses begin to arrive. At the same time, concern over new virus variants and new flare-ups have prompted a return to business and movement restrictions in nations thought to have the virus under control.

Here’s a quick, country-by-country look at where restrictions and vaccine programs stand in dairy export markets from USDEC's overseas offices.

• Bahrain banned dine-in restaurants for three weeks effective Jan. 31 over concerns about new virus strains.
  
  
• Brazil has administered 2 million vaccine doses and says another 18-22 million are due to arrive this month. São Paulo exited the highest level lockdown stage four days earlier than expected, as restaurants, malls and bars reopened on Feb. 3, backed by a new financial aid package from the state government. Brazil’s federal government is in advanced talks to rollout new business support measures nationwide.
  
  
• Chile began its vaccination program Feb. 3 and expects to begin doling out 100,000 doses per day.
  
  
• China reportedly brought recent COVID outbreaks in Hebei and Shanghai under control. Seeking to reduce the number of travelers during the Lunar New Year holiday and limit further spread of COVID-19, China’s government will require anyone traveling from Jan. 28-Mar. 8 to provide a negative PCR test. The country has reportedly inoculated 24 million people so far, second only to the U.S. in total number of shots.
  
  
• Colombia plans to start its vaccination program Feb. 20 and reach its entire population by the end of 2021.
  
  
• Dubai, which had largely reopened, stepped back after a surge in new cases. The nation reinstalled dine-in limits, banned live entertainment in restaurants and hotels, limited attendance at social gatherings, and closed bars and pubs. The new measures went into effect Jan. 27 and could last until March. In addition, Dubai is now requiring all inbound travelers to take a PCR test before arriving.
  
  
• Like many countries, Indonesia’s vaccine program is moving slower than planned. Around 42,000 people per day are getting the shots; the implementation target was 900,000-1 million per day. Indonesian beverage processors have expressed interest in developing products featuring whey protein, which is receiving positive word of mouth over social media platforms as being especially beneficial for health and nutrition during the pandemic.
  
  
• Japan extended a state of emergency order in 10 of the nation’s largest prefectures to March 7. It was supposed to end Feb. 7. The nation is expected to approve the Pfizer-BioNTech this month and has ordered 144 million doses. Separately, USDA’s Tokyo Agricultural Trade Office prepared a new five-page report outlining the impact of COVID-19 on food distribution in Japan.
  
  
• Lebanon extended a 24-hour nationwide curfew and business and movement restrictions until Feb. 8. Grocery stores and restaurants are permitted to remain open only from 5 a.m.-5 p.m. and only for delivery services.
  
  
• Confirmed cases and deaths have been rising in Mexico since the start of the year. Almost the entire country is under maximum (“red”) alert. Government support for business and consumers continues to lag. The vaccine program is underway but off to a very slow start with only about 700,000 people getting a shot so far.
  
  
• Peru will receive its first vaccines next week but only 2.5 million doses are expected through March.
  
  
• The Philippines expects to begin widespread vaccinations in the third or fourth quarter and hopes to inoculate 70 million people by year-end.
  
  
• Saudi Arabia delayed reopening international travel until May 17. It had planned on reopening land, sea and air borders on March 31, but the nation’s vaccination program has stalled due to supply delays and the new virus variants convinced authorities to take a more cautious approach.
  
  
• Singapore expects to vaccinate everyone over the age of 16 by the third quarter of 2021. The nation suspended its “green lane” reciprocal travel arrangements with Malaysia Germany and South Korea with an eye on keeping COVID in check.
  
  
• South Korea expects to begin a nationwide free inoculation program in late February and complete vaccinations on 70% of the population by September. The government was considering lowering the threat level from 2.5 (the second highest), since new daily case numbers have dropped dramatically. But it opted to keep the tighter restrictions in place (limiting restaurant and cafe hours and extending social distancing measures) until after the Lunar New Year holiday on Feb. 14.
  
  
• Thailand says it is on track to produce a locally manufactured COVID-19 vaccine and begin a mass inoculation program in June. The nation is one of a handful reopening parts of its economy (including schools), extending restaurant and supermarket hours, and expanding hotel and convention attendance.
  
  
• Vietnam approved the Oxford/AstraZeneca vaccine and is looking to accelerate delivery as the nation deals with a new flare-up. On Feb. 1, 16 cities and provinces indefinitely closed schools, Hanoi closed bars and nightclubs, and the province of Quang Ninh implemented social distancing measures and locked down the Van Don International Airport. (USDEC overseas offices in China, Japan, Mexico, Middle East/North Africa, South America, South Korea, Southeast Asia and Vietnam)

• USDEC informs of threat posed by EU to confiscate common food names
• Saudi Arabia a growing market for U.S. cheese
• 9 signposts to dairy export performance in 2021
• Encouraging news about larger dairy farms’ potential to reach net zero emissions (retweet)