Sep 20, 2014
Home| Tools| Events| Blogs| Discussions Sign UpLogin

Market Watch Diary: Exports Soak Up Surplus

May 11, 2011
By: Alan Levitt, Dairy Today Contributor
 
 

Levitt blue
ALAN LEVITT is president of Levcom Inc. in Crystal Lake, Ill. You can contact him at (815) 459-1742 or via e-mail.

Tracking the dairy markets is often an extended exercise in math. Here are some figures to consider:

In 2010, U.S. milk production was up by 3.5 billion pounds and fluid milk sales in the U.S. were 776 million pounds lower than they were the year before. Add it up, and that’s more than 4¼ billion pounds of milk—the output of more than 200,000 cows—that need a new home. So where did the extra milk go?

Surprising to many, the primary destination was overseas in the form of nonfat dry milk (NDM) and skim milk powder (SMP). Milk powder exports increased by a staggering 301 million pounds last year—a volume that required about 3.5 billion pounds of extra milk.

The next place it went was the domestic cheese market, which continues to expand year after year. On the strength of a comeback in mozzarella use for pizza, domestic cheese use was about 177 million pounds higher than the year before—taking another 1.7 billion pounds of milk.

Bonus Content


2010 Export Highlights from USDEC

The next largest outlet was the global cheese market. Cheese exports were up by 144 million pounds last year, requiring about 1.4 billion pounds of milk. Butterfat exports were up significantly as well—an additional 62 million pounds, also enough to use 1.4 billion pounds of milk. (Of course, there’s double-counting with butter and NDM/SMP, which use the same milk.) At the same time, domestic use of butter was flat and milk powder was lower.

The additional milk also went into all those little plastic cups of yogurt. Yogurt production (and, by proxy, consumption) was up by 345 million pounds last year.

In the first quarter of 2011, milk production continued to grow. With a mature U.S. market, that means the U.S. has to continue exporting powder, cheese and butter if it is to expand domestic production.

milk powder exportsDTmay11

This trend has strategic implications for the entire industry. If our growth and health depends on a steady flow of products offshore, we have to ensure that our industry structures send the right signals through the supply chain to accomplish that.

It also has obvious market impli-cations. In the 12 months through February 2011, cheese exports averaged 35 million pounds (16,000 tons) per month. NDM/SMP exports averaged 79 million pounds (36,000 tons) per month. The U.S. dairy industry is going to have to maintain that pace to keep the domestic market cleared.

Keep an eye on monthly export volumes going forward. If our shipments start to slow below those levels for any reason, our home markets are going to feel it.

See Comments

FEATURED IN: Dairy Today - May 2011

 
Log In or Sign Up to comment

COMMENTS

No comments have been posted



Name:

Comments:

Receive the latest news, information and commentary customized for you. Sign up to receive the AgWeb Daily eNewsletter today!.

 
 
Enter Zip Code below to view live local results:
bayer
 
 
The Home Page of Agriculture
© 2014 Farm Journal, Inc. All Rights Reserved|Web site design and development by AmericanEagle.com|Site Map|Privacy Policy|Terms & Conditions