In July 2024, U.S. dairy exports to Southeast Asia surged 25%

This comes after a similarly robust performance in June, where exports grew by 14% (+4,819 MT MSE). The U.S. gains in Southeast Asia were largely driven by increased demand for dairy ingredients, which continued to show resilience despite global economic pressures.

U.S. shipments of nonfat dry milk (NFDM)/skim milk powder (SMP) to the region grew by 23% (+4,891 MT), with the Philippines standing out as the key driver. The country saw an 83% increase in imports (+6,003 MT), highlighting the U.S.'s growing presence in this market. Similarly, U.S. low-protein whey exports to Southeast Asia also grew by 27% (+1,978 MT), extending a nearly year-long streak of continuous growth. Notably, the Philippines accounted for much of this surge, tripling its whey imports fr om the U.S. compared to the same period in 2023 (+212%, +1,803 MT).

While the U.S. has seen two consecutive months of strong export growth to Southeast Asia, it remains to be seen if this trend will continue given the limited milk powder production in the U.S. However, several factors could signal future growth potential. Inflation in the region is cooling rapidly, improving consumer purchasing power, while lower palm oil prices have bolstered demand for fat-filled milk powder and blends using whey and skim milk powder. Global dairy trade to Southeast Asia from all major suppliers grew by 9% in the first half of 2024, underscoring the region's expanding appetite for dairy products.

Despite this positive outlook, the U.S. faces stiff competition. New Zealand’s dairy exports to Southeast Asia grew by 6% (+13,323 MT MSE), while the European Uni on (EU27) saw a 9% increase (+23,472 MT MSE), and Australia’s shipments skyrocketed by 77% (+42,122 MT MSE). These countries benefit from tariff advantages and are well-positioned to capitalize on China’s reduced demand for dairy imports. With competition remaining fierce, particularly from Oceania and Europe, the U.S. will need to remain agile to maintain and grow its market share in Southeast Asia.

China Outlook: U.S. Whey Exports to China Continue to Strengthen

U.S. dairy exports to China, particularly in low-protein whey, continued to show strength in July 2024, marking the fourth consecutive month of growth. U.S. low-protein whey exports increased by 36% (+4,905 MT), although monthly volumes have remained relatively stable, suggesting steady but not accelerating demand. This growth is largely tied to the firming pork market in China, wh ere whey remains the most resilient dairy product category.

Global dairy shipments to China fell by 9% (-97,817 MT MSE) in the first half of 2024, but low-protein whey has been less affected, declining by only 4% (-8,441 MT). The U.S. has benefited from this trend, with global shipments of low-protein whey to China improving in the second quarter. This growth is expected to continue, driven by rising piglet prices and increased investment in pig breeding facilities as China looks to rebuild its pork supply. These factors are expected to support whey demand, providing a positive outlook for U.S. dairy exports to China in the near term.

However, outside the whey category, China’s overall demand for dairy imports remains subdued. Economic challenges, weak consumer demand, falling raw milk prices, and increased domestic production have limited the country's need for imported dairy products. While the U.S. may benefit from China’s recent imposition of tariffs on sel ect European dairy products, the broader outlook for U.S. dairy exports to China remains uncertain, particularly for milk powders and other non-whey dairy products.

In summary, while the U.S. dairy sector continues to make gains in key markets like Southeast Asia and China, fierce competition and complex global market dynamics will require strategic focus and adaptability to sustain long-term growth.