U.S. Dairy Exports Update – Oct ’16
Executive Summary
U.S. dairy export figures provided by USDA were recently updated with values spanning through Aug ’16. Highlights from the updated report include:
• The total value of U.S. dairy exports increased on a YOY basis for the first time in 25 months during Aug ’16 but remain significantly below three year average figures for the month of August.
• The U.S. remained a net importer of butter for the 19th consecutive month during Aug ’16 as domestic prices remain at a premium to international prices.
• U.S. dry whey and NFDM/SMP export volumes increased on a YOY basis throughout Aug ’16 as U.S. prices continue to remain competitive within international markets.
Additional Report Details
According to USDA, the Aug ’16 total value of all U.S. dairy exports increased 6.6% MOM on a daily average basis while also finishing higher on a YOY basis for the first time in 25 months, increasing by 2.8%. Despite the YOY increase, the Aug ’16 total value of all U.S. dairy exports remained 24.1% below the three year average figure for the month of August. U.S. high milkfat dairy product prices continued to remain above international prices throughout Aug ’16, contributing to the poor international demand for U.S. dairy products.
Butter – U.S. Remains a Net Importer of Butter for the 19th Consecutive Month
Aug ’16 U.S. export volumes of butterfat remained significantly lower on a YOY basis, declining by 59.4%. Aug ’16 butterfat imports exceeded export volumes for the 19th consecutive month, as total butterfat import volumes finished at nearly five times 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 Aug ’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 import volumes reached a new nine year high. ’15-’16 YTD butterfat imports have increased an additional 27.7% throughout the first 11 months of the production season, while butter exports have declined 28.0% YOY over the same period. Growth in butterfat imports over the past 12 months has been led by product shipped from New Zealand, followed closely by imports of butterfat from Ireland and Mexico. U.S. butter price premiums have been reduced throughout recent months, which may result in future declines in import volumes.
Cheese – Export Volumes Increase YOY for the First Time in 23 Months, Remain Weak Overall
Aug ’16 U.S. cheese export volumes declined 5.3% MOM on a daily average basis but finished higher on a YOY basis for the first time in 23 months, increasing by 0.1%. Despite the YOY increase, Aug ’16 cheese export volumes finished 17.1% below three year average figures for the month of August. Aug ’16 cheese export volumes increased on a YOY basis despite a 4.0% YOY decline in cheddar cheese exports experienced throughout the month. U.S. cheddar cheese prices have traded at a premium to international cheddar cheese prices for 17 consecutive months through Aug ’16.
Aug ’16 cheese export volumes increased on a YOY basis despite declines in shipments destined to Mexico (-6.7%), Japan (-20.1%) and South Korea (-25.7%). Cheese volumes destined to Mexico, Japan and South Korea consisted of nearly half of the total U.S. cheese shipments throughout the month. ’14-’15 annual total cheese exports finished down 13.9% YOY, with cheddar cheese exports finishing down 49.4% and other-than-cheddar cheese finishing down 4.3%. ’15-’16 YTD cheese exports have declined an additional 15.0% throughout the first 11 months of the production season.
Dry Whey – Export Volumes Reach a New 15 Month High, Finish up 46.5% YOY
Aug ’16 U.S. dry whey export volumes increased 22.3% MOM on a daily average basis and 46.5% YOY, finishing at a new 15 month high. The YOY increase in dry whey export volumes was only the third experienced in the past 27 months but the second experienced in a row. YOY increases in dry whey export volumes were led by product destined to China, which increased by 332.6% throughout the month. Dry whey export volume destined to China accounted for nearly half of all dry whey volumes shipped throughout the month. ’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 14.0% throughout the first 11 months of the production season, despite the most recent YOY gains.
WPC – Export Volumes Remain Higher on a YOY Basis for the 13th Consecutive Month
Aug ’16 whey protein concentrate (WPC) export volumes increased 7.3% MOM while remaining higher on a YOY basis, finishing up 45.1%. WPC export volumes have finished higher on a YOY basis over 13 consecutive months through August, increasing by 40.1% in total over the period. ’14-’15 annual WPC export volumes declined to a six year low however ’15-’16 YTD WPC exports have rebounded by 37.1% throughout the first 11 months of the production season and are on pace to reach an annual record high.
NFDM/SMP – Export Volumes Increase on a YOY Basis for the Second Consecutive Month
U.S. export volumes of nonfat dry milk (NFDM) and skim milk powder (SMP) increased 9.7% MOM on a daily average basis while also increasing on a YOY basis for the second consecutive month, finishing up 23.0% YOY. U.S. NFDM/SMP prices have remained competitive with international prices, trading at an 8.0% discount to average Oceania and EU-28 prices throughout the month.
U.S. NFDM/SMP export volumes destined to Mexico increased 41.8% YOY throughout the month, outpacing the 9.4% YOY increase in volumes destined to all other countries. U.S. NFDM/SMP export volumes destined to Mexico accounted for nearly half of all NFDM/SMP volumes shipped throughout the month. 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 6.4% YOY however volumes have rebounded by 1.7% on a YOY basis throughout the first 11 months of the ’15-’16 production season.
U.S. NFDM/SMP and dry whey export volumes as a percentage of production finished higher than the previous year during Aug ’16 while cheese exports as a percentage of production finished flat and butterfat exports as a percentage of production remained lower.
Overall, U.S. dairy export volumes were equivalent to 16.0% of total U.S. milk solids production during Aug ’16, reaching a 16 month high, while dairy import volumes were equivalent to 4.2% of total U.S. milk solids production. Net dairy trade finished at a 15 month high throughout the month.
Aug ’16 U.S. dairy imports as a percentage of production finished 13.5% above the previous month while also remaining 2.4% higher on a YOY basis. ’15-’16 YTD dairy imports as a percentage of production are up 7.9% YOY throughout the first 11 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 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 the 19th Consecutive Month
Aug ’16 U.S. export volumes of butterfat remained significantly lower on a YOY basis, declining by 59.4%. Aug ’16 butterfat imports exceeded export volumes for the 19th consecutive month, as total butterfat import volumes finished at nearly five times 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 Aug ’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 import volumes reached a new nine year high. ’15-’16 YTD butterfat imports have increased an additional 27.7% throughout the first 11 months of the production season, while butter exports have declined 28.0% YOY over the same period. Growth in butterfat imports over the past 12 months has been led by product shipped from New Zealand, followed closely by imports of butterfat from Ireland and Mexico. U.S. butter price premiums have been reduced throughout recent months, which may result in future declines in import volumes.
Cheese – Export Volumes Increase YOY for the First Time in 23 Months, Remain Weak Overall
Aug ’16 U.S. cheese export volumes declined 5.3% MOM on a daily average basis but finished higher on a YOY basis for the first time in 23 months, increasing by 0.1%. Despite the YOY increase, Aug ’16 cheese export volumes finished 17.1% below three year average figures for the month of August. Aug ’16 cheese export volumes increased on a YOY basis despite a 4.0% YOY decline in cheddar cheese exports experienced throughout the month. U.S. cheddar cheese prices have traded at a premium to international cheddar cheese prices for 17 consecutive months through Aug ’16.
Aug ’16 cheese export volumes increased on a YOY basis despite declines in shipments destined to Mexico (-6.7%), Japan (-20.1%) and South Korea (-25.7%). Cheese volumes destined to Mexico, Japan and South Korea consisted of nearly half of the total U.S. cheese shipments throughout the month. ’14-’15 annual total cheese exports finished down 13.9% YOY, with cheddar cheese exports finishing down 49.4% and other-than-cheddar cheese finishing down 4.3%. ’15-’16 YTD cheese exports have declined an additional 15.0% throughout the first 11 months of the production season.
Dry Whey – Export Volumes Reach a New 15 Month High, Finish up 46.5% YOY
Aug ’16 U.S. dry whey export volumes increased 22.3% MOM on a daily average basis and 46.5% YOY, finishing at a new 15 month high. The YOY increase in dry whey export volumes was only the third experienced in the past 27 months but the second experienced in a row. YOY increases in dry whey export volumes were led by product destined to China, which increased by 332.6% throughout the month. Dry whey export volume destined to China accounted for nearly half of all dry whey volumes shipped throughout the month. ’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 14.0% throughout the first 11 months of the production season, despite the most recent YOY gains.
WPC – Export Volumes Remain Higher on a YOY Basis for the 13th Consecutive Month
Aug ’16 whey protein concentrate (WPC) export volumes increased 7.3% MOM while remaining higher on a YOY basis, finishing up 45.1%. WPC export volumes have finished higher on a YOY basis over 13 consecutive months through August, increasing by 40.1% in total over the period. ’14-’15 annual WPC export volumes declined to a six year low however ’15-’16 YTD WPC exports have rebounded by 37.1% throughout the first 11 months of the production season and are on pace to reach an annual record high.
NFDM/SMP – Export Volumes Increase on a YOY Basis for the Second Consecutive Month
U.S. export volumes of nonfat dry milk (NFDM) and skim milk powder (SMP) increased 9.7% MOM on a daily average basis while also increasing on a YOY basis for the second consecutive month, finishing up 23.0% YOY. U.S. NFDM/SMP prices have remained competitive with international prices, trading at an 8.0% discount to average Oceania and EU-28 prices throughout the month.
U.S. NFDM/SMP export volumes destined to Mexico increased 41.8% YOY throughout the month, outpacing the 9.4% YOY increase in volumes destined to all other countries. U.S. NFDM/SMP export volumes destined to Mexico accounted for nearly half of all NFDM/SMP volumes shipped throughout the month. 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 6.4% YOY however volumes have rebounded by 1.7% on a YOY basis throughout the first 11 months of the ’15-’16 production season.
U.S. NFDM/SMP and dry whey export volumes as a percentage of production finished higher than the previous year during Aug ’16 while cheese exports as a percentage of production finished flat and butterfat exports as a percentage of production remained lower.
Overall, U.S. dairy export volumes were equivalent to 16.0% of total U.S. milk solids production during Aug ’16, reaching a 16 month high, while dairy import volumes were equivalent to 4.2% of total U.S. milk solids production. Net dairy trade finished at a 15 month high throughout the month.
Aug ’16 U.S. dairy imports as a percentage of production finished 13.5% above the previous month while also remaining 2.4% higher on a YOY basis. ’15-’16 YTD dairy imports as a percentage of production are up 7.9% YOY throughout the first 11 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 two thirds of total export volumes throughout the month while butter import volumes continued to exceed export volumes.