It wasn't all that long ago that dairy officials and farmers would have been ecstatic exporting 8.1% of U.S. milk production. That's the level of exports reached through the first five months of 2009.
Yet, because the U.S. had been exporting 10.8% of production in 2008 on a milk solids basis, dropping to 8.1% has resulted in the current dairy price crisis. That 2.7% of milk solids not being exported is backing up in U.S. warehouses, causing domestic dairy prices to plummet.
Non-fat dry milk powder exports January through May were 195.2 million lbs, down 53%. Cheese exports were down 30%. Whey exports—dry, whey protein isolates, and whey protein concentrates—were the only collective bright spot, up 1%.
The reason for the decline: Developed countries remain in a recession that has lasted more than a year, says Tom Suber, president of the U.S. Dairy Export Council. That's despite the fact that world dairy prices half of what they were a year ago. For example, whole milk powder is currently priced at $2,050/tonne compared to $4,400 a year ago. Cheddar cheese is prices $2,600/tonne, compared to $5,050 last year. Market recovery probably won't come until 2010 as economic conditions improve.
The good news is the global gross domestic product is expected to rise to 2.5% next year, following a 1.4% decline in 2009. The International Monetary Fund expects world trade volumes to increase 1% next year, compared to a precipitous drop of 12.2% this year.