U.S. Dairy Exports Update – Jul ’16
Executive Summary
U.S. dairy export figures provided by USDA were recently updated with values spanning through May ’16. Highlights from the updated report include:
• The total value of U.S. dairy exports finished lower on a YOY basis for the 22nd consecutive month during May ’16, finishing down 24.1%.
• The U.S. remained a net importer of butter for the 16th consecutive month during May ’16 as domestic prices remain at a significant premium to international prices.
• NFDM/SMP export volumes declined on a YOY basis for the third consecutive month, despite U.S. NFDM/SMP prices trading at a 5.9% discount to average Oceania and EU-28 prices throughout the month.
Additional Report Details
According to USDA, the May ’16 total value of all U.S. dairy exports increased 0.1% MOM on a daily average basis but remained lower on a YOY basis for the 22nd consecutive month, finishing down 24.1%. U.S. high milkfat dairy product prices continued to remain significantly above international prices throughout May ’16, contributing to the lower international demand for U.S. dairy products.
Butter – U.S. Remains a Net Importer of Butter for 16th Consecutive Month
May ’16 U.S. export volumes of butterfat declined 51.6% MOM on a daily average basis while finishing 56.2% below previous year volumes, reaching a six and a half year low. May ’16 butterfat imports exceeded export volumes for the 16th consecutive month, as total butterfat import volumes finished at over four 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 May ’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 31.5% throughout the first two thirds of the production season, while butter exports have declined 21.6% YOY over the same period. Growth in butterfat imports over the past 12 months has been led by product shipped from New Zealand, followed by imports of butterfat from Ireland and Mexico.
Cheese – Export Volumes Remain Lower on YOY Basis for 20th Consecutive Month
May ’16 U.S. cheese export volumes increased 9.3% MOM on a daily average basis but remained lower on a YOY basis for the 20th consecutive month, finishing down 18.6%. Cheddar cheese exports remained particularly weak, declining by 31.1% YOY throughout the month. U.S. cheddar cheese prices have traded at a premium to international cheddar cheese prices for 14 consecutive months through May ’16.
YOY declines in May ’16 cheese export volumes were widespread across major destinations as declines were experienced in volumes shipped to Mexico (-8.4%), South Korea (-18.6%) and Japan (-38.9%). 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 17.5% throughout the first two thirds of the production season.
Dry Whey – Export Volumes Remain Lower on YOY Basis for 24th Consecutive Month
May ’16 U.S. dry whey export volumes increased 23.7% MOM on a daily average basis but remained 19.7% lower on a YOY basis, finishing at a 12 year low for the month of May. The YOY decline in dry whey export volumes was the 24th 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 23.6% throughout the first two thirds of the production season.
NFDM/SMP – Export Volumes Remain Lower on YOY Basis for the Third Consecutive Month
U.S. export volumes of NFDM/SMP declined 8.1% MOM on a daily average basis while finishing lower on a YOY basis for the third consecutive month during May ’16, declining by 27.6%. The decline in export volumes occurred despite U.S. NFDM/SMP prices remaining competitive with international prices, trading at a 5.9% discount to average Oceania and EU-28 prices throughout the month. U.S. NFDM/SMP export volumes destined to Mexico declined 2.9% YOY while volumes destined to all other countries declined by 38.5% YOY throughout the month. U.S. NFDM/SMP export volumes destined to Mexico accounted for over 40% of total NFDM/SMP volumes shipped during May ’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 1.6% throughout the first two thirds of the ’15-’16 production season.
U.S. butterfat, cheese, dry whey and NFDM/SMP export volumes as a percentage of production remained lower than the previous year for the second consecutive month during May ’16.
Overall, U.S. dairy export volumes were equivalent to 13.7% of total U.S. milk solids production in May ’16, reaching an eight month high, while dairy import volumes were equivalent to 3.6% of total U.S. milk solids production.
May ’16 U.S. dairy imports as a percentage of production finished 9.1% above the previous month and flat on a YOY basis. ’15-’16 YTD dairy imports as a percentage of production are up 9.4% YOY throughout the first two thirds 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 16th Consecutive Month
May ’16 U.S. export volumes of butterfat declined 51.6% MOM on a daily average basis while finishing 56.2% below previous year volumes, reaching a six and a half year low. May ’16 butterfat imports exceeded export volumes for the 16th consecutive month, as total butterfat import volumes finished at over four 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 May ’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 31.5% throughout the first two thirds of the production season, while butter exports have declined 21.6% YOY over the same period. Growth in butterfat imports over the past 12 months has been led by product shipped from New Zealand, followed by imports of butterfat from Ireland and Mexico.
Cheese – Export Volumes Remain Lower on YOY Basis for 20th Consecutive Month
May ’16 U.S. cheese export volumes increased 9.3% MOM on a daily average basis but remained lower on a YOY basis for the 20th consecutive month, finishing down 18.6%. Cheddar cheese exports remained particularly weak, declining by 31.1% YOY throughout the month. U.S. cheddar cheese prices have traded at a premium to international cheddar cheese prices for 14 consecutive months through May ’16.
YOY declines in May ’16 cheese export volumes were widespread across major destinations as declines were experienced in volumes shipped to Mexico (-8.4%), South Korea (-18.6%) and Japan (-38.9%). 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 17.5% throughout the first two thirds of the production season.
Dry Whey – Export Volumes Remain Lower on YOY Basis for 24th Consecutive Month
May ’16 U.S. dry whey export volumes increased 23.7% MOM on a daily average basis but remained 19.7% lower on a YOY basis, finishing at a 12 year low for the month of May. The YOY decline in dry whey export volumes was the 24th 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 23.6% throughout the first two thirds of the production season.
NFDM/SMP – Export Volumes Remain Lower on YOY Basis for the Third Consecutive Month
U.S. export volumes of NFDM/SMP declined 8.1% MOM on a daily average basis while finishing lower on a YOY basis for the third consecutive month during May ’16, declining by 27.6%. The decline in export volumes occurred despite U.S. NFDM/SMP prices remaining competitive with international prices, trading at a 5.9% discount to average Oceania and EU-28 prices throughout the month. U.S. NFDM/SMP export volumes destined to Mexico declined 2.9% YOY while volumes destined to all other countries declined by 38.5% YOY throughout the month. U.S. NFDM/SMP export volumes destined to Mexico accounted for over 40% of total NFDM/SMP volumes shipped during May ’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 1.6% throughout the first two thirds of the ’15-’16 production season.
U.S. butterfat, cheese, dry whey and NFDM/SMP export volumes as a percentage of production remained lower than the previous year for the second consecutive month during May ’16.
Overall, U.S. dairy export volumes were equivalent to 13.7% of total U.S. milk solids production in May ’16, reaching an eight month high, while dairy import volumes were equivalent to 3.6% of total U.S. milk solids production.
May ’16 U.S. dairy imports as a percentage of production finished 9.1% above the previous month and flat on a YOY basis. ’15-’16 YTD dairy imports as a percentage of production are up 9.4% YOY throughout the first two thirds 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.