Canadian Butter Imports Update – Jan ’16
Low domestic butter supplies due to increased consumption and higher than average holiday demand forced the Canadian Dairy Commission to permit imports of 4,000 MT, or 8.8 million pounds, of butter during early Jan ’16. The Canadian dairy industry operates under a supply management system which is intended to prevent such shortfalls by matching domestic butterfat production with domestic demand. The butter import permit was only for product sourced from New Zealand, Ireland, Belgium and Uruguay, although U.S. butter imports to Canada also increased sharply in Nov ’15, reaching an all-time record high for the month of November. Despite reaching a seasonal record high in Nov ’15, the 546 MT of U.S. butter exported to Canada pales in comparison to the 4,000 MT of butter imported from other regions following the shortage experienced in early Jan ’16. U.S. butter exports to Canada have reached just 3,239 MT throughout the previous 12 month period. The additional 4,000 MT of butter imported into Canada is large relative to historical import volumes, but remains a very small portion of domestic consumption within Canada. Canada has imported an average of 8,500 MT of butter annually over the past five years, however imports accounted for just 8.5% of total annual consumption over the period. The 4,000 MT of butter imported into Canada represented just 4.0% of the five year annual consumption levels. The butter shortage is likely to be a non-issue going forward as the Canadian Dairy Commission has approved milk production expansion throughout Canada. Nevertheless, butterfat imports into Canadian will be worth keeping an eye on in coming months.