Export picture brightens for U.S. dairy

exports

Lower milk production in other exporting countries and higher world prices for dairy products — which make U.S. products more competitive — are giving U.S. exporters better leverage in world markets.

U.S. dairy exports in April topped year-ago levels for the 11th consecutive month, with gains in most product categories and to most major destinations, according to the latest U.S. Dairy Export Council report.

Exporters shipped 162,441 tons of milk powder, cheese, butterfat, whey and lactose in April, up 12 percent from a year ago. Those sales totaled $461 million, up 23 percent from April 2016.

The two main categories driving the increase are nonfat dry milk/skim milk powders and whey, said Alan Levitt, USDEC market analyst.

The top market was Mexico, which imported $103.2 million in U.S. dairy products in April, up 9 percent from a year earlier. Southeast Asia followed, with sales 23 percent higher to $68.3 million. Sales to Canada grew 2 percent to $53.1 million, and sales to China were up 91 percent to $47.7 million.

Some of the large increases are due to weak comparables in 2016, Levitt said.

“We’re still not back up to where we were in 2014 when sales peaked,” he said.

U.S. cheese exports have picked up lately, increasing 15 percent from January through April, and that’s certainly a positive. Fluid milk shipments are up 14 percent in the same time period, he said.

Total exports, excluding milk and cream, were up 13 percent in volume to 624.3 million metric tons and 18 percent in value to $1.8 billion from January through April.

Part of the reason for the gains is that world prices increased in the second half of 2016, and U.S. prices have become more competitive. Those increased prices are due to significant reductions in milk production in other countries. In the fourth quarter of 2016, milk production was down 3.4 percent in the EU, 7.6 percent in Australia and 4.3 percent in New Zealand, Levitt said.

“So our competitors haven’t had as much (product) to sell. The U.S. is the only exporter increasing production over the last year and a half,” he said.

U.S. milk production was up 2.5 percent in the last quarter of 2016, he said.

World prices have been relatively soft the last two to three years due to a higher global milk supply and buyers had been lulled into not buying ahead. But the EU didn’t have the spring flush in milk production it was hoping for, which led to a “feeding frenzy” in the last month or two — particularly for butterfat, which pulled up prices for everything, he said.

He doesn’t know how sustainable current world prices are, however, and thinks they’ll pull back by the third quarter, he said.

Looking ahead for the U.S., “pricing relationships can determine who gets what,” he said.

World butter prices are record high, but U.S. butter mostly goes to domestic demand. U.S. cheese prices are competitive relative to everyone else because Oceania and EU prices keep moving up. And the U.S. is in good shape in regard to whey and milk powders, he said.

“I think we’re going to have a pretty good year,” he said.

 

Source: Capital Press

Link: http://www.capitalpress.com/Dairy/20170613/export-picture-brightens-for-us-dairy

 

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