U.S. Dairy Exports Decline YOY for Seventh Consecutive Month…
According to USDA, the total value of all U.S. dairy exports declined YOY for the seventh consecutive month in Feb ’15, falling 25.9%. The YOY decline was the second largest in over five years, despite U.S. dairy exports increasing seasonally MOM in February. The total value of all U.S. dairy exports increased MOM on a daily average basis for the first time since Nov ’14, increasing 19.6% vs. the two and a half year low experienced in Jan ’15. Dairy exports typically increase seasonally from January – February, with the total value increasing by an average of 11.1% over the past five years. West Coast port issues were resolved in late February, however export volumes continue to be negatively affected by a strengthening dollar relative to the currencies of traditional buyers of U.S. dairy products. A strengthening dollar results in less purchasing power for importing countries, and ultimately less foreign demand for U.S. products, all other factors being equal.
Butter – YOY Export Volumes Decline for Tenth Consecutive Month, Finish Down 71.7%
Feb ’15 export volumes of butterfat increased 10.2% MOM on a daily average basis but remained lower YOY, finishing down 71.7%. 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 ten consecutive months, with total volumes down 59.7% over the period.
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 peaked in Sep ’14, 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 throughout the fourth quarter of 2014 and into 2015, however export volumes remain significantly below previous years.
Cheese – Export Volumes Rebound From Two Year Low, Remain Down 5.4% YOY
Feb ’15 U.S. cheese export volumes rebounded strongly from the two year low reached in Jan ’15, increasing 37.8% MOM on a daily average to an eight month high. Cheese export volumes remained lower on a YOY basis for the fifth consecutive month, finishing down 5.4%. Cheddar cheese exports remained particularly weak, declining 57.2% YOY. Feb ’15 cheese volumes destined to the two largest U.S. export markets were higher on a YOY basis, with cheese shipments to Mexico increasing 23.1% and cheese shipments to South Korea increasing 24.9%, however volumes to all other destinations declined 22.1% YOY.
Dry Whey – Exports Decline YOY for Ninth Consecutive Month, Finish Down 26.4%
Feb ’15 export volumes of dry whey increased 15.5% MOM on a daily average basis off of the seven year low experienced in Jan ’15, but remained lower YOY, finishing down 26.4%. The Jan ’15 – Feb ’15 increase was significantly higher than the five year average January – February seasonal increase of 1.2%. Despite the MOM increase, the Feb ’15 YOY decline in dry whey export volumes was the second largest in over two years on a percentage basis. YOY dry whey export volumes have declined for nine consecutive months after beginning the ’13-’14 production season with YOY increases in seven of the first eight months, with total volumes declining by 15.7% over the period.
NFDM/SMP – Exports Decline YOY for Seventh Consecutive Month, Finish Down 1.5% YOY
Feb ’15 export volumes of NFDM/SMP increased 12.8% MOM on a daily average basis but remain lower YOY, finishing 1.5% lower. NFDM/SMP exports have declined for seven consecutive months after increasing for 15 of the 16 months leading up to Aug ’14. Total volumes have declined by 15.4% over the period. YOY declines persisted despite export volumes to Mexico remaining strong, up 34.2% in Feb ’15 and 19.0% over the seven month period. U.S. NFDM/SMP exports to Mexico accounted for over two fifths of all Feb ’15 shipments. NFDM/SMP exports to China have weakened considerably, down 59.9% YOY over the past six months.
See the chart below for a summary of key U.S. dairy product exports as a percentage of production in Feb ’15 vs. a year ago.
Butter – YOY Export Volumes Decline for Tenth Consecutive Month, Finish Down 71.7%
Feb ’15 export volumes of butterfat increased 10.2% MOM on a daily average basis but remained lower YOY, finishing down 71.7%. 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 ten consecutive months, with total volumes down 59.7% over the period.
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 peaked in Sep ’14, 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 throughout the fourth quarter of 2014 and into 2015, however export volumes remain significantly below previous years.
Cheese – Export Volumes Rebound From Two Year Low, Remain Down 5.4% YOY
Feb ’15 U.S. cheese export volumes rebounded strongly from the two year low reached in Jan ’15, increasing 37.8% MOM on a daily average to an eight month high. Cheese export volumes remained lower on a YOY basis for the fifth consecutive month, finishing down 5.4%. Cheddar cheese exports remained particularly weak, declining 57.2% YOY. Feb ’15 cheese volumes destined to the two largest U.S. export markets were higher on a YOY basis, with cheese shipments to Mexico increasing 23.1% and cheese shipments to South Korea increasing 24.9%, however volumes to all other destinations declined 22.1% YOY.
Dry Whey – Exports Decline YOY for Ninth Consecutive Month, Finish Down 26.4%
Feb ’15 export volumes of dry whey increased 15.5% MOM on a daily average basis off of the seven year low experienced in Jan ’15, but remained lower YOY, finishing down 26.4%. The Jan ’15 – Feb ’15 increase was significantly higher than the five year average January – February seasonal increase of 1.2%. Despite the MOM increase, the Feb ’15 YOY decline in dry whey export volumes was the second largest in over two years on a percentage basis. YOY dry whey export volumes have declined for nine consecutive months after beginning the ’13-’14 production season with YOY increases in seven of the first eight months, with total volumes declining by 15.7% over the period.
NFDM/SMP – Exports Decline YOY for Seventh Consecutive Month, Finish Down 1.5% YOY
Feb ’15 export volumes of NFDM/SMP increased 12.8% MOM on a daily average basis but remain lower YOY, finishing 1.5% lower. NFDM/SMP exports have declined for seven consecutive months after increasing for 15 of the 16 months leading up to Aug ’14. Total volumes have declined by 15.4% over the period. YOY declines persisted despite export volumes to Mexico remaining strong, up 34.2% in Feb ’15 and 19.0% over the seven month period. U.S. NFDM/SMP exports to Mexico accounted for over two fifths of all Feb ’15 shipments. NFDM/SMP exports to China have weakened considerably, down 59.9% YOY over the past six months.
See the chart below for a summary of key U.S. dairy product exports as a percentage of production in Feb ’15 vs. a year ago.