February Dairy Exports Encouraging, But

April 8, 2015 09:44 AM
February Dairy Exports Encouraging, But

February U.S. dairy exports were up in most categories and showed the strongest volume growth for skim milk powder in four months, says Eric Meyer, an analyst with High Ground Trading, Chicago, Ill. Total cheese exports jumped 24% over January, butter was up 23% and whey protein concentrates (<80%) jumped 12.6%.

That’s the good news. But one month of positive trade data does not a trend make. U.S. exports are still running about 20% behind a year ago, with just 13% of milk production now being exported. In 2014, roughly 17% of milk production went to exports.

“Based on market movement from February to March and the U.S. currency strength against a number of dairy exporting countries, it is widely expected exports will continue its weak tone through the first half of 2015, if not longer,” says Meyer.

China had been a big driver of those sales. Since 2008, China has accounted for 40% of the growth in global dairy trade, notes Alan Levitt with the U.S. Dairy Export Council. While it still continues to import, it has not been gobbling up dairy products as in years past. In fact, Chinese and Southeast Asian countries purchased 42% less skim milk powder in February compared to last year.

Some analysts, such as Tim Hunt with Rabobank, believe other countries will increase dairy purchases as world prices decline. That appears to be happening. Mexico increased its skim milk powder purchases 31% in February. Pakistan, which bought nothing last February, purchased 2,770 metric tons in February 2015, and Peru, Chile, Columbia increased their purchases 1,641 metric tons the February. Collectively, these five countries made up nearly 90% of the Asian shortfall in powder sales in February.

However, U.S. imports of dairy products have also jumped because some U.S. commodities (butter) are higher than competitors. The strength of the dollar also makes the U.S. market more attractive. Butter imports are up 83% and total cheese imports are up 24% year-to-date over last year. Total cheese exports in February were still more than double exports, but butter imports now almost equal exports.





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