U.S. Dairy Exports Update – May ’16
Executive Summary U.S. dairy export figures provided by USDA were recently updated with values spanning through Mar ’16. Highlights from the updated report include: • The total value of U.S. dairy exports finished lower on a YOY basis for the 20th consecutive month during Mar ’16, finishing down 30.5%. • U.S. butterfat export volumes remained higher on a YOY basis for the third consecutive month during Mar ’16 however the U.S. remained a net importer of butter for the 14th consecutive month as domestic prices remain at a significant premium to international prices. • NFDM/SMP export volumes declined on a YOY basis for the first time in seven month, despite U.S. NFDM/SMP prices trading at a 7.4% discount to average Oceania and EU-28 prices throughout the month. Additional Report Details According to USDA, the Mar ’16 total value of all U.S. dairy exports declined 0.8% MOM on a daily average basis while also remaining lower on a YOY basis for the 20th consecutive month, finishing down 30.5%. U.S. high milkfat dairy product prices continued to remain significantly above international prices throughout Mar ’16, even after adjusting for a strengthening dollar relative to the currencies of major global dairy exporters and importers. Butter – U.S. Remains a Net Importer of Butter for 14th Consecutive Month U.S. export volumes of butterfat declined 24.1% MOM on a daily average basis during Mar ’16 but remained higher on a YOY basis for the third consecutive month, finishing up 25.2%. Mar ’16 butterfat imports exceeded export volumes for the 14th consecutive month, however, as total butterfat import volumes finished at nearly double the export volumes experienced throughout the month. 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 half 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 and Mexico. Cheese – Export Volumes Remain Lower on YOY Basis for 18th Consecutive Month Mar ’16 U.S. cheese export volumes declined 2.2% MOM on a daily average basis while also remaining lower on a YOY basis for the 18th consecutive month, finishing down 25.7%. Cheddar cheese exports remained particularly weak, declining by 29.2% YOY throughout the month. U.S. cheddar cheese prices have traded at a premium to international cheddar cheese prices for 12 consecutive months through Mar ’16. Mar ’16 cheese export volumes destined to Mexico increased on a YOY basis for the fourth time in the past six months, finishing up 7.2%, however shipments to South Korea and Japan remained weak, finishing 60.6% and 6.3% 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 14.3% throughout the first half of the production season. Dry Whey – Export Volumes Decline to New 11 Year Low Mar ’16 U.S. dry whey export volumes declined 24.6% MOM on a daily average basis, finishing at a new 11 year low. Dry whey export volumes remained lower on a YOY basis for the 22nd consecutive month, finishing 39.1% below the previous year’s level. ’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 23.7% throughout the first half of the production season. NFDM/SMP – Export Volumes Decline on YOY Basis for the First Time in Seven Months U.S. export volumes of NFDM/SMP finished lower on a YOY basis for the first time in the past seven months during Mar ’16, declining by 25.2%. The decline in export volumes occurred despite U.S. NFDM/SMP prices remaining competitive with international prices, trading at a 7.4% discount to average Oceania and EU-28 prices throughout the month. Mar ’16 NFDM/SMP volumes destined to Mexico were particularly weak, declining by 29.6%. U.S. NDFM/SMP export volumes destined 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, despite the most recent decline, export volumes remain up 9.1% YOY throughout the first half of the ’15-’16 production season. Mar ’16 U.S. cheese, dry whey and NFDM/SMP exports as a percentage of production remained lower than the previous year, however U.S. butterfat exports as a percentage of production finished ahead of the previous year for the third consecutive month. Overall, U.S. dairy export volumes were equivalent to 12.1% of total U.S. milk solids production in Mar ’16 while dairy import volumes were equivalent to 3.9% of total U.S. milk solids production. Net U.S. dairy trade as a percentage of milk solids production reached a 14 month low in Mar ’16 as export volumes declined and import volumes increased from previous months. Mar ’16 U.S. dairy imports as a percentage of production increased 2.6% from the previous month while also finishing 14.7% higher YOY. ’15-’16 YTD dairy imports as a percentage of production are up 12.0% YOY throughout the first half 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 70% of total export volumes throughout the month while butter import volumes continued to exceed export volumes. U.S. butterfat import volumes continue to outpace overall dairy import volumes on a YOY percentage basis, increasing by 61.2% YOY during Mar ’16, compared to a 14.7% YOY increase in all dairy import volumes as a percentage of milk solids production. U.S. cheese import volumes also remained strong, increasing by 12.2% YOY.