The United States imported fewer dairy products early in the pandemic as local supplies filled pipelines and global supply chains experienced unparalleled disruption. According to USDA’s Global Agricultural Trade System (GATS), the United States imported $3.3 billion worth of dairy products in 2020, down 2.2% from 2019, after adjusting for leap day.
However, the respite was short-lived, according to Monica Ganley, analyst with the Daily Dairy Report and principal of Quarterra, a consulting firm in Argentina. By January, 2021, imports were once again on the rise; the value of U.S. dairy imports set a new record high for the month of $267.6 million, a 9.5% year-over-year gain.
A drop in cheese purchases led last year’s reduction in imports. At 363.6 million pounds, annual cheese imports were the weakest since 2014. “The prevailing uncertainty of the year combined with greatly diminished foodservice demand likely pushed imports down, even as U.S. product at times carried a significant premium to global competitors’ products,” Ganley states. “Moreover, cheese imports from the European Union were limited by retaliatory tariffs tied to the Boeing-Airbus dispute. Those tariffs have now been suspended temporarily.”
Reduced imports likely helped to prevent further accumulation of cheese stocks as strong domestic production filled warehouses, but that trend could be shifting, she adds. Mirroring the year-over-year trend in overall imports, cheese imports also improved in January, rising 8.5% to reach 29.4 million pounds.
Even though 2020 butter imports slipped 6.2% year over year, the butter and milkfat category set a record high last year of 149.1 million pounds, up 0.4% after accounting for the leap day. A 12.7% climb in imports of anhydrous milkfat (AMF) drove most of the increase for the category, according to GATS data.
“The strength of 2020’s milkfat imports is curious, considering that U.S. butter was inexpensive for most of the year,” Ganley notes. “CME spot butter prices exhibited tremendous volatility in the first few months of the pandemic, but by the second half of the year, U.S. butter prices were both historically low as well as inexpensive relative to product from other international suppliers. The weak dollar also should have discouraged additional imports.”
However, the tide appears to have shifted, according to Ganley. “Aggressive purchasing by Chinese buyers has pushed global prices higher and that is likely to attract available fat toward Asia rather than into the United States,” she says. “In addition, continued dollar weakness and logistical complications could discourage additional imports of butter and milkfat this year.”
GATS data for January shows that unlike cheese and overall dairy imports, total butter and milkfat imports were down 27.5% compared with January 2020, suggesting a shift could already be occurring. “Reduced imports of fat should help the butter market move toward balance this year,” she adds.
