U.S. Butterfat Imports Update – Oct ’14
According to USDA, total volumes of U.S. butterfat imports have increased throughout the past several months as domestic butter prices continue to remain significantly higher than international prices. The following charts provide a brief overview of trends within the U.S. butterfat import market. • U.S. butter prices have traded at a significant premium to Europe and Oceania butter prices in recent months. Sep ’14 U.S. butter prices continued to gain on Europe and Oceania butter prices when adjusted to 80% butterfat, resulting in the largest U.S. – international butter price premium in over ten years. • Over the past five years, over half of the total U.S. butterfat imports have come from New Zealand. Other major supplying regions include the EU-28, Australia and Mexico. Within the EU-28, U.S. butterfat imports have come primarily from Ireland, which accounted for over half of the total EU-28 imports throughout the past five years, followed by France, Denmark, the U.K. and Germany. • New Zealand has led all other countries in butterfat exports to the U.S. for each of the last 30 years, however Ireland has exported 45% more butter than New Zealand to the U.S. throughout the first eight months of 2014. 39% of 2014 YTD U.S. butterfat imports have come from Ireland through Aug ’14, with only 27% coming from New Zealand. • The vast majority of butterfat imports come in the form of butter or anhydrous milkfat (AMF), with a small fraction coming in as dairy spreads and other miscellaneous butterfat products. • U.S. butterfat imports are regulated by a two-tiered tariff-rate quota system. A lower tier rate applies to imports up to a specific quantity (labeled low-tariff imports below) with higher tariff rates applying to imports above that volume (label over-quota imports below). As a percentage of total butterfat imports, over-quota imports have trended lower in recent years. • Sep ’14 over-quota imports of butter and AMF were the highest monthly volumes since Dec ’12 and the second highest monthly volumes since Dec ’09. Sep ’14 volumes were five times larger than the average Jan – Aug ’14 volumes. • Sep ’14 over-quota imports of butter and AMF were the highest volumes for the month of August since 2005, reaching a nine year high. • The monthly U.S. butterfat trade balance (exports – imports) reached near all-time highs prior to the recent significant run up in domestic butter prices. • The Aug ’14 U.S. butterfat trade balance reached a 20 month low, due to both a decrease in exports and an increase in imports. Aug ’14 U.S. butterfat exports reached a 20 month low while imports reached a 20 month high. • Domestic butter prices continued to increase throughout September, which is expected to result in a continued decline in the U.S. butter trade balance. Sep ’14 U.S. butter import figures will be released Tues, Nov 4th.