U.S. vs. International Dairy Commercial Disappearance – Sep ’14
The ’13-’14 YOY increase in commercial disappearance of milk used in all products on a milk-fat basis is on pace to be the largest annual increase on record, however growth has continued to stem almost exclusively from an increase in dairy exports. On a milk-fat basis, commercial disappearance of milk used in all products has increased at a compound annual growth rate (CAGR) of 1.5% since 2000. Over the same time period, commercial dairy exports have increased at a CAGR of 15.6% while domestic commercial disappearance have increased at a CAGR of only 1.1%. A significant portion of growth in commercial disappearance of all milk on a skim-solids basis has also been due to an increase in exports. Since 2000, commercial disappearance of milk used in all products has increased at a CAGR of 1.8% on a skim-solids basis. Over the same time period, commercial dairy exports have increased at a CAGR of 12.2% while domestic commercial disappearance has increased at a CAGR of only 0.6%. U.S. dairy exports have continued to play a larger role in total U.S. dairy commercial disappearance since 2000. U.S. commercial exports as a percentage of total commercial disappearance have increased from 1.1% in 2000 to 6.0% in 2013 on a milk-fat basis (CAGR of 13.9%) and 5.3% in 2000 to 18.7% in 2013 on a skim-solids basis (CAGR of 10.2%). This trend has continued through 2014, with Jan – Jul ’14 YTD exports accounting for 7.0% of total commercial disappearance on a milk-fat basis and 19.8% of total commercial disappearance on a skim-solids basis. U.S. dairy exports have shown signs of weakness of late, particularly on a milk-fat basis as exports of U.S. butter declined 38.5% in Jul ’14. As domestic milk and dairy product prices continue to strengthen vs. international prices, domestic exports are expected to continue to decline in upcoming months. Coupled with the Russian dairy ban and relative declines in China dairy exports, a lack of continued export growth may result in slowing overall U.S. dairy commercial disappearance in near-term months.