U.S. Dairy Exports Update – Apr ’16
Executive Summary U.S. dairy export figures provided by USDA were recently updated with values spanning through Feb ’16. Highlights from the updated report include: • The Feb ’16 total value of U.S. dairy exports increased 5.4% off of the five year low experienced during Jan ’16 but remained lower on a YOY basis for the 19th consecutive month, finishing down 20.5%. • U.S. butterfat export volumes increased to a 19 month high during Feb ’16 however the U.S. remained a net importer of butter for the 13th consecutive month as domestic prices remain at a significant premium to international prices. • NFDM/SMP export volumes remained higher on a YOY basis for the sixth consecutive month, finishing up 12.1%, as U.S. powder prices remain competitive internationally. Additional Report Details According to USDA, the Feb ’16 total value of all U.S. dairy exports increased 5.4% MOM on a daily average basis from the five year low experienced during the previous month but remained lower on a YOY basis for the 19th consecutive month, finishing down 20.5%. U.S. high milkfat dairy product prices continued to remain significantly above international prices throughout Feb ’16 while export volumes also continued to be negatively affected by a strengthening dollar relative to the currencies of traditional buyers of U.S. dairy products. A strengthening dollar results in less purchasing power for importing countries, and ultimately less foreign demand for U.S. products, all other factors being equal. Butter – U.S. Remains a Net Importer of Butter for 13th Consecutive Month U.S. export volumes of butterfat increased for the fifth consecutive month during Feb ’16, finishing up 68.4% MOM on a daily average basis and 54.9% YOY. Feb ’16 butterfat export volumes reached a 19 month high, however butterfat imports continued to exceed export volumes throughout the month. The U.S. was a net importer of butter for the 13th consecutive month during Feb ’16, as total butterfat import volumes exceeded butterfat export volumes by 18.5%. U.S. butter prices have traded at a premium to Europe and New Zealand butter prices when adjusted to 80% butterfat since May ’14, reducing export demand. The U.S. / international butter price spread reached an 11 year high during Nov ’15 prior to declining but remained at a significant premium throughout more recent months. ’14-’15 annual butterfat exports finished down 69.9% YOY while annual butterfat imports finished up 172.5% YOY. Overall, ’14-’15 annual U.S. butterfat imports reached a new nine year high. ’15-’16 YTD butterfat imports have increased an additional 34.7% throughout the first five months of the production season, while butter exports have declined 22.7% YOY over the same period. Growth in butterfat imports over the past 12 months has been led by product shipped from New Zealand, followed by imports of butterfat from Ireland, Mexico and France. Cheese – Export Volumes Remain Lower on YOY Basis for 17th Consecutive Month Feb ’16 U.S. cheese export volumes increased 18.8% MOM on a daily average basis from the three year low experienced during the previous month but remained lower on a YOY basis, finishing down 20.4%. U.S. cheese export volumes have finished lower on a YOY basis for 17 consecutive months through February. Cheddar cheese exports also remained weak, declining by 20.3% YOY. U.S. cheddar cheese prices have traded at a premium to international cheddar cheese prices for 12 consecutive months through Feb ’16. Feb ’16 cheese export volumes destined to Mexico declined on a YOY basis for only the second time in the past six months, finishing 3.1% below the previous year, while shipments to Japan and South Korea remained weak, finishing 38.2% and 38.3% lower, respectively. Cheese volumes destined to Mexico, South Korea and Japan consisted of over half of the total U.S. cheese shipments throughout the month. ’14-’15 annual total cheese exports finished down 14.1% YOY, with cheddar cheese exports finishing down 49.4% and other-than-cheddar cheese finishing down 4.6%. ’15-’16 YTD cheese exports have declined an additional 11.4% throughout the first five months of the production season. Dry Whey – Export Volumes Remain Lower on YOY Basis for 21st Consecutive Month Feb ’16 U.S. dry whey export volumes continued to increase slightly from the 11 year low experienced in Sep ’15 but finished lower on a YOY basis for the 21st consecutive month, declining by 8.5% to a 12 year low for the month of February. Dry whey export volumes have increased MOM on a daily average basis for five consecutive months through Feb ’16, however monthly volumes exported from Sep ’15 – Jan ’16 were the lowest experienced in the past seven years. ’14-’15 annual dry whey exports finished down 18.0% YOY to a new 11 year low while ’15-’16 YTD dry whey exports have declined an additional 20.3% throughout the first five months of the production season. NFDM/SMP – Export Volumes Remain Higher on YOY Basis for Sixth Consecutive Month U.S. export volumes of NFDM/SMP finished higher on a YOY basis for the sixth consecutive month during Feb ’16, finishing up 12.1% to a new record high for the month of February. U.S. NFDM/SMP export volumes have remained strong as U.S. prices remain competitive with international prices. U.S. NFDM/SMP prices traded at a 1.5% discount to Oceania and EU-28 average prices over the six month period of increasing export volumes. Feb ’16 NFDM/SMP volumes destined to Mexico increased most significantly on a YOY basis, finishing up 21.4%, followed by shipments to the Philippines, which increased 16.1% YOY. U.S. NDFM/SMP export volumes to Mexico increased 24.1% YOY throughout 2015 while export volumes shipped to all other destinations declined by 10.1% over the same period. ’14-’15 annual NFDM/SMP exports finished down 6.1% YOY however volumes are up 19.0% YOY throughout the first five months of the ’15-’16 production season. Feb ’16 U.S. cheese and dry whey exports as a percentage of production remained lower than the previous year, however U.S. butterfat and NFDM/SMP exports as a percentage of production finished ahead of the previous year for the second and sixth consecutive months, respectively. Overall, U.S. dairy export volumes were equivalent to 13.4% of total U.S. milk solids production in Feb ’16 while dairy import volumes were equivalent to 3.8% of total U.S. milk solids production. Net U.S. dairy trade as a percentage of milk solids production reached a four month high in Feb ’16 as export volumes increased and import volumes declined from previous months. Feb ’16 U.S. dairy imports as a percentage of production declined 13.6% from the six and a half year high experienced in Jan ’16 but remain 18.8% higher YOY. ’15-’16 YTD dairy imports as a percentage of production are up 11.5% YOY throughout the first five months of the production season. Net trade of U.S. NFDM/SMP and dry whey continues to outpace that of cheese and butter as dry product import volumes remain minimal. U.S. cheese imports offset over 75% of total export volumes throughout the month while butter import volumes continued to exceed export volumes. U.S. butterfat and cheese import volumes continue to outpace overall dairy import volumes on a YOY percentage basis, increasing by 53.0% YOY and 33.7% YOY, respectively during Feb ’16, compared to a 18.8% YOY increase in all dairy import volumes as a percentage of milk solids production.