Executive Summary U.S. dairy export figures provided by USDA were recently updated with values spanning through Dec ’16. Highlights from the updated report include:

• The U.S. remained a net importer of butter for the 23^rd consecutive month during Dec ’16, despite export volumes increasing on a YOY basis for the fourth consecutive month.
• U.S. cheese export volumes reached a 19 month high on strong cheddar cheese demand, finishing up 15.8% YOY. U.S. NFDM/SMP export volumes remained higher on a YOY basis for the sixth consecutive month throughout Dec ’16 but finished at a six month low overall.
• Net dairy trade on a percentage of total U.S. milk solids production basis declined to a seven month low during Dec ’16 but remained 15.6% higher on a YOY basis.

Additional Report Details Butter – U.S. Remains a Net Importer of Butter for the 23^rd Consecutive Month Dec ’16 U.S. export volumes of butterfat declined on a MOM basis for the second consecutive month but remained higher on a YOY basis, finishing up 23.8%. Butter export volumes have increased on a YOY basis over four consecutive months through December but remained 54.7% below three year average seasonal figures. Despite the YOY gain in export volumes, Dec ’16 butterfat imports exceeded export volumes for the 23^rd consecutive month. ’15-’16 annual U.S. 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 Ireland, followed closely by imports of butterfat from Mexico and New Zealand. ’15-’16 annual butter export volumes declined to a ten year low however ’16-’17 YTD figures have rebounded by 23.8% throughout the first quarter of the production season. Cheese – Export Volumes Reach a 19 Month High on Strong Cheddar Demand, Finish up 15.8% Dec ’16 U.S. cheese export volumes increased 10.9% MOM on a daily average basis while also remaining higher on a YOY basis for the third consecutive month, finishing up 15.8%. Overall, total cheese export volumes increased to a 19 month high throughout the month. Total cheese export volumes were driven higher by a significant increase in cheddar cheese demand. Cheddar cheese export volumes increased 34.5% YOY throughout the month while other-than-cheddar cheese export volumes finished 13.6% above previous year levels. ’15-’16 annual cheese export volumes declined to a four year low however ’16-’17 YTD figures have rebounded by 10.2% throughout the first quarter of the production season and are on pace to reach a three year high. Dec ’16 YOY increases in cheese export volumes were led by product destined to South Korea (+51.9%) and Japan (+25.5%), which more than offset a 2.1% decline in export volumes destined to Mexico. Cheese volumes destined to Mexico, South Korea and Japan accounted for over half of the total U.S. cheese shipments throughout the month. Dry Whey – Export Volumes Increase on a YOY Basis for the Sixth Consecutive Month, Finish up 47.9% Dec ’16 U.S. dry whey export volumes increased 4.7% MOM on a daily average basis while also remaining significantly higher on a YOY basis, finishing up 47.9%. U.S. dry whey export volumes have increased on a YOY basis over six consecutive months through December. YOY increases in dry whey export volumes continue to be led by product destined to China, which increased by 191.5% throughout the month. Dry whey export volume destined to China accounted for over 40% of all dry whey volumes shipped throughout the month. ’15-’16 annual dry whey export volumes declined to a 12 year low however ’16-’17 YTD figures have rebounded by 51.4% throughout the first quarter of the production season and are on pace to reach a three year high. WPC – Export Volumes Finish Higher on a YOY Basis for the 16^th Time in the Past 17 Months Dec ’16 whey protein concentrate (WPC) export volumes declined 10.1% MOM on a daily average basis but remained higher on a YOY basis for the 16^th time in the past 17 months, increasing by 41.9%. U.S. WPC export volumes increased to a record seasonal high, finishing 32.8% above three year average figures for the month of December. ’15-’16 annual WPC export volumes finished at a record high level while ’16-’17 YTD figures are up an additional 36.2% throughout the first quarter of the production season. NFDM/SMP – Export Volumes Increase on a YOY Basis for the Sixth Consecutive Month, Finish up 1.3% U.S. export volumes of nonfat dry milk (NFDM) and skim milk powder (SMP) declined 16.9% MOM on a daily average basis to a six month low but remained higher on a YOY basis for the sixth consecutive month, finishing up 1.3% YOY. U.S. NFDM/SMP prices remained below international averages prices for the 24^th consecutive month during Dec ’16, trading at a 10.1% 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 12.4% 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. Export volumes destined to all other regions increased 16.0% YOY, led by increases in product destined to Indonesia, Pakistan and China. U.S. butterfat, cheese and dry whey export volumes as a percentage of production finished higher than the previous year during Dec ’16 while NFDM/SMP exports as a percentage of production finished slightly lower. Overall, U.S. dairy export volumes were equivalent to 14.5% of total U.S. milk solids production during Dec ’16, while dairy import volumes were equivalent to 4.1% of total U.S. milk solids production. Dec ’16 net dairy trade finished at a seven month low but remained up 15.6% YOY. Dec ’16 U.S. dairy exports as a percentage of production declined 8.2% MOM but remained higher on a YOY basis for the third consecutive month, finishing up 13.3%. ’15-’16 annual dairy exports as a percentage of production declined 3.8% YOY to a four year low however volumes are up 17.9% throughout the first quarter of the ’16-’17 production season. Dec ’16 U.S. dairy imports as a percentage of production increased 2.5% MOM and 7.9% YOY. ’15-’16 annual dairy imports as a percentage of production increased 8.3% YOY, finishing at an eight year high, and volumes are up an additional 2.7% throughout the first quarter of the ’16-’17 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 three quarters of total export volumes throughout the month while butter import volumes continued to exceed export volumes.