The Atten Babler Commodities Dairy Foreign Exchange (FX) Indices were mixed throughout Feb ’22. The USD/Dairy Importer FX Index and USD/Dairy Exporter FX Index increased to 16 and 20 month high levels, respectively, however USD/Domestic Dairy Importer FX Index declined to a four month low level throughout the month.

Global Dairy Net Trade:

Major net dairy exporters are led by New Zealand, followed by the EU-28, the U.S., Australia and Argentina (represented in green in the chart below). Major net dairy importers are led by China, followed by Russia, Mexico, Japan, Indonesia, Algeria and the Philippines (represented in red in the chart below).

New Zealand accounts for over two fifths of the USD/Dairy Exporter FX Index, followed by the EU-28 at 29% and the United States at 17%. Australia and Argentina each account for between 5-10% of the index.

China accounts for a quarter of the USD/Dairy Importer FX Index while Russia accounts for a fifth. Mexico, Japan, Indonesia, Algeria and the Philippines each account for between 5-10% of the index.

USD/Dairy Exporter FX Index:

The USD/Dairy Exporter FX Index increased 0.5 points throughout Feb ’22, finishing at a 20 month high value of 107.5. The USD/Dairy Exporter FX Index has increased 3.7 points throughout the past six months and 27.3 points since the beginning of 2014. A strong USD/Dairy Exporter FX Index reduces the competitiveness of U.S. dairy products relative to other exporting regions (represented in green in the Global Dairy Net Trade chart), ultimately resulting in less foreign demand for U.S. products, all other factors being equal. USD appreciation against the Argentine peso has accounted for the majority of the gains since the beginning of 2014.

USD appreciation within the USD/Dairy Exporter FX Index during Feb ’22 was led by gains against the New Zealand dollar, followed by gains against the Argentine peso and Australian dollar. USD declines were exhibited against the euro.

USD/Dairy Importer FX Index:

The USD/Dairy Importer FX Index increased 0.4 points throughout Feb ’22, finishing at a 16 month high value of 142.0. The USD/Dairy Importer FX Index has increased 2.7 points throughout the past six months and 41.4 points since the beginning of 2014. A strong USD/Dairy Importer FX Index results in less purchasing power for major dairy importing countries (represented in red in the Global Dairy Net Trade chart), making U.S. dairy products more expensive to import. USD appreciation against the Russian ruble has accounted for the majority of the gains since the beginning of 2014.

USD appreciation within the USD/Dairy Importer FX Index during Feb ’22 was led by gains against the Russian ruble, followed by gains against the Algerian dinar and Japanese yen. USD declines were exhibited against the Brazilian real and Chinese yuan renminbi.

U.S. Dairy Export Destinations:

Major destinations for U.S. dairy exports are led by Mexico, followed by China, Canada, the Philippines, Indonesia, Japan and South Korea.

Mexico accounts for nearly a quarter of the USD/Domestic Dairy Importer FX Index, followed by China at 12%. Canada, the Philippines, Indonesia, Japan and South Korea each account for between 5-10% of the index.

USD/Domestic Dairy Importer FX Index:

The USD/Domestic Dairy Importer FX Index declined 0.1 point throughout Feb ’22, finishing at a four month low value of 137.3. The USD/Domestic Dairy Importer FX Index remained up 1.5 points throughout the past six months and 30.5 points since the beginning of 2014, despite the most recent decline. A strong USD/Domestic Dairy Importer FX Index results in less purchasing power for the traditional buyers of U.S. dairy products (represented in red in the U.S. Dairy Export Destinations chart), ultimately resulting in less foreign demand for U.S. products, all other factors being equal. USD appreciation against the Mexican peso has accounted for the majority of the gains since the beginning of 2014.

Appreciation against the USD within the USD/Domestic Dairy Importer FX Index during Feb ’22 was led by gains by the Brazilian real, followed by gains by the Mexican peso, Thai baht and Peruvian sol. USD gains were experienced against the Canadian dollar.