U.S. Dairy Exports Update – Nov ’16
Executive Summary
U.S. dairy export figures provided by USDA were recently updated with values spanning through Sep ’16. Highlights from the updated report include:
• The total value of U.S. dairy exports increased to an 11 month high but remained lower on a YOY basis, finishing down 1.6% during Sep ’16.
• The U.S. remained a net importer of butter for the 20th consecutive month during Sep ’16 as domestic prices remained at a premium to international prices through September.
• U.S. NFDM/SMP export volumes increased on a YOY basis for the third consecutive month throughout Sep ’16 as U.S. prices continued to remain competitive within international markets.
Additional Report Details
According to USDA, the Sep ’16 total value of all U.S. dairy exports increased 0.6% MOM on a daily average basis to an 11 month high but finished lower on a YOY basis, declining by 1.6%. Export volumes remained lower on a YOY basis despite U.S. dairy product price premiums declining to a 17 month low vs. international prices throughout the month of September. Sep ’16 total value of all U.S. dairy exports finished 19.7% below the three year average figure for the month of September.
Butter – U.S. Remains a Net Importer of Butter for the 20th Consecutive Month
Sep ’16 U.S. export volumes of butterfat increased on a YOY basis for the first time in six months, finishing up 120.5% but remaining at minimal levels overall. Despite the YOY gain, Sep ’16 butterfat imports exceeded export volumes for the 20th consecutive month, as total butterfat import volumes finished at nearly twice 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 Sep ’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, ’15-’16 annual butterfat imports increased 27.1% YOY, finishing at a new record high, while butterfat export volumes declined 23.9% 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 Finish Lower on Weak Cheddar Demand
Sep ’16 U.S. cheese export volumes increased 0.3% MOM on a daily average basis but finished lower on a YOY basis for the 23rd time in the past 24 months, declining by 0.6%. Cheddar cheese export volumes were particularly weak throughout the month, finishing down 32.3%. U.S. cheddar cheese prices have traded at a premium to international cheddar cheese prices for 16 consecutive months through Aug ’16, but finished below international average price levels during Sep ’16. Sep ’16 cheese export volumes finished 12.6% below three year average figures for the month of September.
Sep ’16 YOY declines in cheese export volumes were led by product destined to Japan (-31.2%) and Mexico (-7.9%) which more than offset a 19.1% increase in export volumes destined to South Korea. Cheese volumes destined to Mexico, Japan and South Korea accounted for over half of the total U.S. cheese shipments throughout the month. ’14-’15 annual total cheese exports finished down 13.9% YOY, driven lower by a 49.4% YOY decline in cheddar cheese volumes. ’15-’16 annual cheese exports declined an additional 14.0% as cheddar cheese export volumes fell 27.7%.
Dry Whey – Export Volumes Remain Higher on a YOY Basis, Finish up 35.8%
Sep ’16 U.S. dry whey export volumes declined 23.2% MOM on a daily average basis from the 15 month high experienced during the previous month but remained higher on a YOY basis, finishing up 35.8%. The YOY increase in dry whey export volumes was only the fourth experienced in the past 28 months but the third experienced in a row. YOY increases in dry whey export volumes continue to be led by product destined to China, which increased by 211.2% throughout the month. Dry whey export volume destined to China accounted for over 40% 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 annual dry whey exports declined an additional 11.1%, despite the most recent YOY gains.
WPC – Export Volumes Decline on a YOY Basis for the First Time in 14 Months
Sep ’16 whey protein concentrate (WPC) export volumes increased 3.3% MOM but finished lower on a YOY basis, declining up 2.6%. The YOY decline in WPC export volumes was the first experienced in the past 14 months, however shipments remained 35.8% above three year average figures for the month of September. ’14-’15 annual WPC export volumes declined to a six year low however ’15-’16 annual WPC exports rebounded by 31.8%, finishing at an annual record high.
NFDM/SMP – Export Volumes Increase on a YOY Basis for the Third Consecutive Month
U.S. export volumes of nonfat dry milk (NFDM) and skim milk powder (SMP) declined 1.8% MOM on a daily average basis but remained higher on a YOY basis for the third consecutive month, finishing up 5.6% YOY. U.S. NFDM/SMP prices have remained competitive with international prices, trading at a 17.8% discount to average Oceania and EU-28 prices throughout the month.
U.S. NFDM/SMP export volumes remained higher on a YOY basis despite volumes destined to Mexico declining by 20.2% throughout the month. U.S. NFDM/SMP export volumes destined to Mexico accounted for over 40% 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 rebounded by 2.1% on a YOY basis throughout the ’15-’16 production season.
U.S. butterfat and dry whey export volumes as a percentage of production finished higher than the previous year during Sep ’16 while cheese and NFDM/SMP exports as a percentage of production finished lower.
Overall, U.S. dairy export volumes were equivalent to 14.7% of total U.S. milk solids production during Sep ’16, while dairy import volumes were equivalent to 3.7% of total U.S. milk solids production. Net dairy trade finished at the second highest value experienced throughout the past 12 months.
Sep ’16 U.S. dairy imports as a percentage of production finished 11.9% below the previous month but remained 12.1% higher on a YOY basis. ’15-’16 annual dairy imports as a percentage of production finished up 8.3% YOY, finishing at an eight year high.
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 20th Consecutive Month
Sep ’16 U.S. export volumes of butterfat increased on a YOY basis for the first time in six months, finishing up 120.5% but remaining at minimal levels overall. Despite the YOY gain, Sep ’16 butterfat imports exceeded export volumes for the 20th consecutive month, as total butterfat import volumes finished at nearly twice 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 Sep ’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, ’15-’16 annual butterfat imports increased 27.1% YOY, finishing at a new record high, while butterfat export volumes declined 23.9% 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 Finish Lower on Weak Cheddar Demand
Sep ’16 U.S. cheese export volumes increased 0.3% MOM on a daily average basis but finished lower on a YOY basis for the 23rd time in the past 24 months, declining by 0.6%. Cheddar cheese export volumes were particularly weak throughout the month, finishing down 32.3%. U.S. cheddar cheese prices have traded at a premium to international cheddar cheese prices for 16 consecutive months through Aug ’16, but finished below international average price levels during Sep ’16. Sep ’16 cheese export volumes finished 12.6% below three year average figures for the month of September.
Sep ’16 YOY declines in cheese export volumes were led by product destined to Japan (-31.2%) and Mexico (-7.9%) which more than offset a 19.1% increase in export volumes destined to South Korea. Cheese volumes destined to Mexico, Japan and South Korea accounted for over half of the total U.S. cheese shipments throughout the month. ’14-’15 annual total cheese exports finished down 13.9% YOY, driven lower by a 49.4% YOY decline in cheddar cheese volumes. ’15-’16 annual cheese exports declined an additional 14.0% as cheddar cheese export volumes fell 27.7%.
Dry Whey – Export Volumes Remain Higher on a YOY Basis, Finish up 35.8%
Sep ’16 U.S. dry whey export volumes declined 23.2% MOM on a daily average basis from the 15 month high experienced during the previous month but remained higher on a YOY basis, finishing up 35.8%. The YOY increase in dry whey export volumes was only the fourth experienced in the past 28 months but the third experienced in a row. YOY increases in dry whey export volumes continue to be led by product destined to China, which increased by 211.2% throughout the month. Dry whey export volume destined to China accounted for over 40% 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 annual dry whey exports declined an additional 11.1%, despite the most recent YOY gains.
WPC – Export Volumes Decline on a YOY Basis for the First Time in 14 Months
Sep ’16 whey protein concentrate (WPC) export volumes increased 3.3% MOM but finished lower on a YOY basis, declining up 2.6%. The YOY decline in WPC export volumes was the first experienced in the past 14 months, however shipments remained 35.8% above three year average figures for the month of September. ’14-’15 annual WPC export volumes declined to a six year low however ’15-’16 annual WPC exports rebounded by 31.8%, finishing at an annual record high.
NFDM/SMP – Export Volumes Increase on a YOY Basis for the Third Consecutive Month
U.S. export volumes of nonfat dry milk (NFDM) and skim milk powder (SMP) declined 1.8% MOM on a daily average basis but remained higher on a YOY basis for the third consecutive month, finishing up 5.6% YOY. U.S. NFDM/SMP prices have remained competitive with international prices, trading at a 17.8% discount to average Oceania and EU-28 prices throughout the month.
U.S. NFDM/SMP export volumes remained higher on a YOY basis despite volumes destined to Mexico declining by 20.2% throughout the month. U.S. NFDM/SMP export volumes destined to Mexico accounted for over 40% 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 rebounded by 2.1% on a YOY basis throughout the ’15-’16 production season.
U.S. butterfat and dry whey export volumes as a percentage of production finished higher than the previous year during Sep ’16 while cheese and NFDM/SMP exports as a percentage of production finished lower.
Overall, U.S. dairy export volumes were equivalent to 14.7% of total U.S. milk solids production during Sep ’16, while dairy import volumes were equivalent to 3.7% of total U.S. milk solids production. Net dairy trade finished at the second highest value experienced throughout the past 12 months.
Sep ’16 U.S. dairy imports as a percentage of production finished 11.9% below the previous month but remained 12.1% higher on a YOY basis. ’15-’16 annual dairy imports as a percentage of production finished up 8.3% YOY, finishing at an eight year high.
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.