U.S. dairy export volumes in July were the lowest since January but remained above last year's pace.

Suppliers shipped 170,100 tons of milk powders, cheese, butterfat, whey products, and lactose during the month, up 11% from July 2018. U.S. exports were worth $434.0 million, up 3%. In the first seven months of 2018, dairy exports totaled $3.34 billion, 5% more than the same period in 2017, while overall volume was up 18%.  

Gains in July were led by strong sales of nonfat dry milk/skim milk powder (NDM/SMP) and lactose, while whey and cheese volumes slowed. On a value basis, exports to Southeast Asia ($68 million, +24%) and Mexico ($104 million, +10%) paced the gains, offsetting a drop in sales to China ($35 million, -27%).  

Exports of NDM/SMP totaled 54,343 tons, a 30% increase vs. a year ago. Shipments to Mexico (24,938 tons) and Southeast Asia (19,222 tons), the two largest U.S. markets, were up 31% and 40%, respectively. In contrast, exports to Pakistan slowed dramatically in the last two months, with just 1,343 tons (-41%) sold in June and July.  

(Official U.S. Bureau of Census data continues to show an increase in WMP exports to Mexico. However, Mexican import data and trade sources don't corroborate this, and we believe this volume represents SMP sales that were misclassified at the port. Therefore, we've adjusted NDM/SMP and WMP trade data for June 2016 to June 2018 to account for this misclassification.)  

Lactose exports totaled 33,828 tons in July, 15% greater than levels in July 2017. Shipments to China (7,529 tons) were up 53% and exports to Southeast Asia (7,030 tons) were up 29%.  

Cheese exports were 27,636 tons in July, the lowest figure since January, and up just 1% from last year. Cheese shipments to Mexico (6,917 tons) were down 1%, sales to Japan (2,982 tons) were off 14%, and exports to China (494 tons) were down 56%, offsetting gains in volumes to South Korea (5,470 tons, +11%) and the Middle East/North Africa (MENA) region (1,856 tons, +43%).  

Whey exports were just 39,273 tons, the lowest in more than two years and down 8% from a year ago. Shipments to China (14,422 tons) were off significantly (-26%), with steep declines in sales of dry whey and WPC.   Whey suppliers also saw a decline in shipments to Canada (2,459 tons, -35%), but boosted sales to Southeast Asia (7,791 tons, +22%) and South Korea (1,565 tons, +290%).  

Butterfat exports totaled 3,791 tons, up 84% from the year before, led by increased sales to Mexico (1,449 tons, up more than four-fold).  

Exports of WMP and MPC continued to track higher in July. WMP shipments of 4,193 tons were more than double year-ago levels, with most of the volume going to Southeast Asia (a record-high 3,179 tons). MPC exports of 2,438 tons were up 23%, with higher sales to Canada and New Zealand offsetting lower sales to China.  

Shipments of fluid milk and cream continued at a record pace in 2018, with July sales of 9.66 million liters, up 14%. For the second straight month, Taiwan (4.2 million liters, +17%) was the largest U.S. customer.  

For the second straight month, exports of food preps/blends lagged year-ago levels (4,598 tons in July, -30%). Volumes were lower to all major markets.