U.S. Dairy Exports Decline YOY for Third Consecutive Month…
According to USDA, the total value of all U.S. dairy exports in Oct ’14 declined YOY for the third consecutive month, falling 15.7% YOY. The Aug-Oct ’14 YOY declines were for first experienced in over a year and a half, with the Sep-Oct ’14 YOY declines being the largest in five years. The total value of all U.S. dairy exports increased slightly MOM, up 2.5% vs. Sep ’14 figures on a daily average basis. Exports had declined on a MOM basis in five of the last six months.
Butter – Exports Continue to Weaken, Reach New Two Year Low
Oct ’14 export volumes of butterfat continue to weaken, declining 80.4% YOY and 16.3% MOM on a daily average basis. Butterfat export volumes reached a new two year low in Oct ’14, with the YOY percentage decline being the largest in over five years. Butterfat exports began to slow in the second quarter of 2014, with 2Q ’14 export sales 36.2% below 1Q ’14 export sales on a daily average basis. YOY butterfat exports have declined for six consecutive months, down 53.0% over the period.
U.S. butterfat exports to Middle Eastern and Northern African countries were particularly weak, especially in Saudi Arabia, Morocco and Egypt which accounted for zero Oct ’14 exports after accounting for over a quarter of total U.S. butterfat exports in Oct ’13. It has been speculated that EU-28 butter could displace U.S. butter in the Middle East due to the Russian dairy import ban that was announced in early August. Russia accounted for nearly a third of EU-28 butter exports in 2013.
U.S. butter prices have traded at a premium to Europe and New Zealand butter prices when adjusted to 80% butterfat since May, reducing export demand. The spreads increased through September, with U.S. butter prices trading at an 80.6% premium to European prices and a 128.1% premium to Oceania prices. Domestic butter price premiums have declined in October and November, but prices remain significantly higher than international prices. If this trend continues it is reasonable to expect an extended relative decline in U.S. butter exports.
Cheese – YOY Exports Decline for First Time in 17 Months, Reach New 20 Month Low
Oct ’14 U.S. cheese exports declined 2.8% YOY and 8.7% MOM on a daily average basis. The YOY decline was the first in the last 17 months while monthly export volumes on an absolute basis reached a 20 month low. Cheddar cheese exports were particularly weak, down 23.4% YOY and 22.4% MOM on a daily average basis. As with butter exports, cheese exports to Middle Eastern and North African countries were weak, with combined shipments to Saudi Arabia, Morocco and Egypt down 57.1% YOY.
Dry Whey – YOY Exports Decline for Fifth Consecutive Month
Oct ’14 export volumes of dry whey declined 8.9% YOY but increased 8.7% MOM on a daily average basis. YOY dry whey export volumes have declined for five consecutive months after beginning the ’13-’14 production season with YOY increases in seven of the first eight months. The MOM increase in dry whey exports was the first experienced in seven months.
NFDM/SMP – YOY Exports Decline for Third Consecutive Month
Oct ’14 export volumes of NFDM/SMP declined 24.6% YOY but increased 16.7% MOM on a daily average basis. NFDM/SMP exports have declined for three consecutive months after increasing for 15 of the 16 months leading up to Aug ’14. Despite the MOM increase, U.S. NFDM/SMP export volumes remain 38.3% lower than the record high volumes shipped in Jun ’14.
See the chart below for a summary of key U.S. dairy product exports as a percentage of production in Oct ’14 vs. a year ago.
Butter – Exports Continue to Weaken, Reach New Two Year Low
Oct ’14 export volumes of butterfat continue to weaken, declining 80.4% YOY and 16.3% MOM on a daily average basis. Butterfat export volumes reached a new two year low in Oct ’14, with the YOY percentage decline being the largest in over five years. Butterfat exports began to slow in the second quarter of 2014, with 2Q ’14 export sales 36.2% below 1Q ’14 export sales on a daily average basis. YOY butterfat exports have declined for six consecutive months, down 53.0% over the period.
U.S. butterfat exports to Middle Eastern and Northern African countries were particularly weak, especially in Saudi Arabia, Morocco and Egypt which accounted for zero Oct ’14 exports after accounting for over a quarter of total U.S. butterfat exports in Oct ’13. It has been speculated that EU-28 butter could displace U.S. butter in the Middle East due to the Russian dairy import ban that was announced in early August. Russia accounted for nearly a third of EU-28 butter exports in 2013.
U.S. butter prices have traded at a premium to Europe and New Zealand butter prices when adjusted to 80% butterfat since May, reducing export demand. The spreads increased through September, with U.S. butter prices trading at an 80.6% premium to European prices and a 128.1% premium to Oceania prices. Domestic butter price premiums have declined in October and November, but prices remain significantly higher than international prices. If this trend continues it is reasonable to expect an extended relative decline in U.S. butter exports.
Cheese – YOY Exports Decline for First Time in 17 Months, Reach New 20 Month Low
Oct ’14 U.S. cheese exports declined 2.8% YOY and 8.7% MOM on a daily average basis. The YOY decline was the first in the last 17 months while monthly export volumes on an absolute basis reached a 20 month low. Cheddar cheese exports were particularly weak, down 23.4% YOY and 22.4% MOM on a daily average basis. As with butter exports, cheese exports to Middle Eastern and North African countries were weak, with combined shipments to Saudi Arabia, Morocco and Egypt down 57.1% YOY.
Dry Whey – YOY Exports Decline for Fifth Consecutive Month
Oct ’14 export volumes of dry whey declined 8.9% YOY but increased 8.7% MOM on a daily average basis. YOY dry whey export volumes have declined for five consecutive months after beginning the ’13-’14 production season with YOY increases in seven of the first eight months. The MOM increase in dry whey exports was the first experienced in seven months.
NFDM/SMP – YOY Exports Decline for Third Consecutive Month
Oct ’14 export volumes of NFDM/SMP declined 24.6% YOY but increased 16.7% MOM on a daily average basis. NFDM/SMP exports have declined for three consecutive months after increasing for 15 of the 16 months leading up to Aug ’14. Despite the MOM increase, U.S. NFDM/SMP export volumes remain 38.3% lower than the record high volumes shipped in Jun ’14.
See the chart below for a summary of key U.S. dairy product exports as a percentage of production in Oct ’14 vs. a year ago.