U.S. Dairy Exports Update – Aug ’16
Executive Summary
U.S. dairy export figures provided by USDA were recently updated with values spanning through Jun ’16. Highlights from the updated report include:
• The total value of U.S. dairy exports declined on a YOY basis for the 23rd consecutive month during Jun ’16, finishing down 17.7%.
• The U.S. remained a net importer of butter for the 17th consecutive month during Jun ’16 as domestic prices remain at a significant premium to international prices.
• NFDM/SMP export volumes declined on a YOY basis for the fourth consecutive month, despite U.S. NFDM/SMP prices trading at a 9.2% discount to average Oceania and EU-28 prices throughout the month.
Additional Report Details
According to USDA, the Jun ’16 total value of all U.S. dairy exports increased 1.0% MOM on a daily average basis but remained lower on a YOY basis for the 23rd consecutive month, finishing down 17.7%. U.S. high milkfat dairy product prices continued to remain significantly above international prices throughout Jun ’16, contributing to the lower international demand for U.S. dairy products.
Butter – U.S. Remains a Net Importer of Butter for 17th Consecutive Month
Jun ’16 U.S. export volumes of butterfat rebounded from the six and a half year low experienced during the previous month but remained significantly lower on a YOY basis, declining by 41.8%. Jun ’16 butterfat imports exceeded export volumes for the 17th consecutive month, as total butterfat import volumes finished at over four times the export volumes experienced throughout the month. The deficit in net butter trade was the largest experienced in the past nine and a half years on a volume basis.
U.S. butter prices have traded at a premium to Europe and New Zealand butter prices when adjusted to 80% butterfat since Jun ’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 32.7% throughout the first three quarters of the production season, while butter exports have declined 23.2% YOY over the same period. Growth in butterfat imports over the past 12 months has been led by product shipped from Ireland, followed by imports of butterfat from New Zealand and Mexico.
Cheese – Export Volumes Remain Lower on YOY Basis for 21st Consecutive Month
Jun ’16 U.S. cheese export volumes declined 0.4% MOM on a daily average basis while remaining lower on a YOY basis for the 21st consecutive month, finishing down 11.8%. Cheddar cheese exports remained particularly weak, declining by 15.8% YOY throughout the month. U.S. cheddar cheese prices have traded at a premium to international cheddar cheese prices for 15 consecutive months through Jun ’16.
YOY declines in Jun ’16 cheese export volumes were widespread across major destinations as declines were experienced in volumes shipped to Mexico (-2.2%), South Korea (-34.9%) and Japan (-3.8%). 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 17.2% throughout the first three quarters of the production season.
Dry Whey – Export Volumes Remain Lower on YOY Basis for 25th Consecutive Month
Jun ’16 U.S. dry whey export volumes increased 7.8% MOM on a daily average basis to a 12 month high but remained 2.5% lower on a YOY basis, finishing at an eight year low for the month of June. The YOY decline in dry whey export volumes was the 25th experienced in a row. ’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 21.0% throughout the first three quarters of the production season.
WPC – Export Volumes Increase to New Monthly Record High
Jun ’16 whey protein concentrate (WPC) export volumes also finished higher on a MOM basis, increasing by 24.3% on a daily average basis to a new monthly record high. WPC export volumes finished 98.7% higher than the previous year volumes while finishing 11.3% above the previous monthly record high experienced during Sep ’12. WPC export volumes have finished higher on a YOY basis for six consecutive months through June and ’15-’16 YTD WPC exports are up 31.9% throughout the first three quarters of the production season.
NFDM/SMP – Export Volumes Remain Lower on YOY Basis for the Fourth Consecutive Month
U.S. export volumes of nonfat dry milk (NFDM) and skim milk powder (SMP) increased 0.2% MOM on a daily average basis but finished lower on a YOY basis for the fourth consecutive month during Jun ’16, declining by 8.9%. The decline in export volumes occurred despite U.S. NFDM/SMP prices remaining competitive with international prices, trading at a 9.2% discount to average Oceania and EU-28 prices throughout the month. U.S. NFDM/SMP export volumes destined to Mexico declined 5.9% YOY while volumes destined to all other countries declined by 10.5% YOY throughout the month. U.S. NFDM/SMP export volumes destined to Mexico accounted for over a third of total NFDM/SMP volumes shipped during Jun ’16. 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 while volumes are down an additional 2.1% throughout the first three quarters of the ’15-’16 production season.
U.S. butterfat, cheese and NFDM/SMP export volumes as a percentage of production remained lower than the previous year for the third consecutive month during Jun ’16 while dry whey export volumes as a percentage of production finished higher on a YOY basis for the first time in 18 months.
Overall, U.S. dairy export volumes were equivalent to 14.9% of total U.S. milk solids production during Jun ’16, reaching a 13 month high, while dairy import volumes were equivalent to 4.1% of total U.S. milk solids production.
Jun ’16 U.S. dairy imports as a percentage of production finished 13.9% above the previous month and 7.9% higher a YOY basis. ’15-’16 YTD dairy imports as a percentage of production are up 9.2% YOY throughout the first three quarters 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 two thirds of total export volumes throughout the month while butter import volumes continued to exceed export volumes.
Butter – U.S. Remains a Net Importer of Butter for 17th Consecutive Month
Jun ’16 U.S. export volumes of butterfat rebounded from the six and a half year low experienced during the previous month but remained significantly lower on a YOY basis, declining by 41.8%. Jun ’16 butterfat imports exceeded export volumes for the 17th consecutive month, as total butterfat import volumes finished at over four times the export volumes experienced throughout the month. The deficit in net butter trade was the largest experienced in the past nine and a half years on a volume basis.
U.S. butter prices have traded at a premium to Europe and New Zealand butter prices when adjusted to 80% butterfat since Jun ’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 32.7% throughout the first three quarters of the production season, while butter exports have declined 23.2% YOY over the same period. Growth in butterfat imports over the past 12 months has been led by product shipped from Ireland, followed by imports of butterfat from New Zealand and Mexico.
Cheese – Export Volumes Remain Lower on YOY Basis for 21st Consecutive Month
Jun ’16 U.S. cheese export volumes declined 0.4% MOM on a daily average basis while remaining lower on a YOY basis for the 21st consecutive month, finishing down 11.8%. Cheddar cheese exports remained particularly weak, declining by 15.8% YOY throughout the month. U.S. cheddar cheese prices have traded at a premium to international cheddar cheese prices for 15 consecutive months through Jun ’16.
YOY declines in Jun ’16 cheese export volumes were widespread across major destinations as declines were experienced in volumes shipped to Mexico (-2.2%), South Korea (-34.9%) and Japan (-3.8%). 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 17.2% throughout the first three quarters of the production season.
Dry Whey – Export Volumes Remain Lower on YOY Basis for 25th Consecutive Month
Jun ’16 U.S. dry whey export volumes increased 7.8% MOM on a daily average basis to a 12 month high but remained 2.5% lower on a YOY basis, finishing at an eight year low for the month of June. The YOY decline in dry whey export volumes was the 25th experienced in a row. ’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 21.0% throughout the first three quarters of the production season.
WPC – Export Volumes Increase to New Monthly Record High
Jun ’16 whey protein concentrate (WPC) export volumes also finished higher on a MOM basis, increasing by 24.3% on a daily average basis to a new monthly record high. WPC export volumes finished 98.7% higher than the previous year volumes while finishing 11.3% above the previous monthly record high experienced during Sep ’12. WPC export volumes have finished higher on a YOY basis for six consecutive months through June and ’15-’16 YTD WPC exports are up 31.9% throughout the first three quarters of the production season.
NFDM/SMP – Export Volumes Remain Lower on YOY Basis for the Fourth Consecutive Month
U.S. export volumes of nonfat dry milk (NFDM) and skim milk powder (SMP) increased 0.2% MOM on a daily average basis but finished lower on a YOY basis for the fourth consecutive month during Jun ’16, declining by 8.9%. The decline in export volumes occurred despite U.S. NFDM/SMP prices remaining competitive with international prices, trading at a 9.2% discount to average Oceania and EU-28 prices throughout the month. U.S. NFDM/SMP export volumes destined to Mexico declined 5.9% YOY while volumes destined to all other countries declined by 10.5% YOY throughout the month. U.S. NFDM/SMP export volumes destined to Mexico accounted for over a third of total NFDM/SMP volumes shipped during Jun ’16. 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 while volumes are down an additional 2.1% throughout the first three quarters of the ’15-’16 production season.
U.S. butterfat, cheese and NFDM/SMP export volumes as a percentage of production remained lower than the previous year for the third consecutive month during Jun ’16 while dry whey export volumes as a percentage of production finished higher on a YOY basis for the first time in 18 months.
Overall, U.S. dairy export volumes were equivalent to 14.9% of total U.S. milk solids production during Jun ’16, reaching a 13 month high, while dairy import volumes were equivalent to 4.1% of total U.S. milk solids production.
Jun ’16 U.S. dairy imports as a percentage of production finished 13.9% above the previous month and 7.9% higher a YOY basis. ’15-’16 YTD dairy imports as a percentage of production are up 9.2% YOY throughout the first three quarters 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 two thirds of total export volumes throughout the month while butter import volumes continued to exceed export volumes.