Following months of price weakness, it appears demand for whey products is picking up, especially high-protein whey protein concentrates (WPCs). And that’s helping to lift prices across the whey complex.
“Much to the surprise of many in the industry, dry whey rose to 42 cents per pound in mid-November, which given the September fundamentals seemed illogical,” said Betty Berning, analyst with the Daily Dairy Report. “But inventories of dry whey peaked at 88.5 million pounds in August, a five-year high, and then declined somewhat into September, suggesting demand could have picked up.”
According to USDA data, domestic disappearance of dry whey has been running ahead of 2022 utilization in six of the first eight months of this year, and use increased consistently between May and August. Exports, however, have been declining. Dry whey exports of 34.3 million pounds in September fell more than 31% compared to September 2022.
Notably, sales to China, the United States’ top market for dry whey, slowed by more than 46% year over year, Berning said. And through September, dry whey exports to China lagged the same period in 2022 by almost 11%, according to USDA Global Agricultural Trade Systems data.
Shipments to Canada, the number-two buyer of U.S. dry whey in 2022, dropped nearly 25%, compared to September 2022. For the first nine months of this year, U.S. dry whey exports to Canada plummeted 41%. Demand from Southeast Asia has also sputtered, with year-over-year dry whey sales to Vietnam, Indonesia, and Malaysia down double-digits through September.
“The hog industry in Asia has been struggling because producers there face poor margins and have smaller herds due to African swine fever,” she noted. “The poor export numbers were a little surprising, though, given how low dry whey prices were when sales were booked—likely in June or July—when CME spot whey prices below 30 cents per pound reached an all-time low.”
Overseas demand for whey protein concentrates (WPC) with less than 80% protein, including WPC 34, also waned, with September shipments down 29% year over year. China’s purchases fell 57% relative to September to just over than 8 million pounds.
However, exports of high-protein WPC have been strong. September exports at 16.3 million pounds bested the old September record by 3.6 million pounds, and all major markets—Japan, China, and Canada—purchased more product. In all these places, exports expanded year to date compared to the same period a year earlier.
“While WPC with 80% or more protein is more spendy than its lower-protein counterparts, the higher price point hasn’t scared off international buyers,” Berning said. “Production of high-protein WPC climbed in September, as processors heeded the call of increased global buying and took advantage of making a higher-valued commodity.”
Consumption of WPC, including domestic use, appears to be tightening inventories across the whey complex. As manufacturers dry more high-protein WPC to meet demand, more of the whey stream will be consumed, Berning said, and that could push production of dry whey lower, helping to bring that market back into balance.
