There has been a lot of discussion and anticipation as to the strength of weakness of dairy exports this year. Exports have slowed from the torrid pace it had achieved during the second half of 2013 and the first half of 2014. High U.S. prices last year reduced competitiveness in World markets. Global Dairy Trade auction prices continued to slide while U.S. prices increased. Previously contracted export orders were being filled leaving little supply be build domestic inventory. Prices continued to increase in the effort to slow demand of which it eventually accomplished.
Cooperative Working Together has been instrumental in helping to move dairy products to other countries despite the decline of overall exports. So far this year they have assisted in the exports of 24.843 million pounds of cheese and 24.387 million pounds of butter. Let’s take a look at just how good or bad exports are at the present time. In order to do this, we need to go back not only to last year, but a few years to get an accurate picture of where we are.
February exports of cheese totaled 29,578 metric tons, a decline of 5.4% from the previous year. Even though this is a bit of a disappointment in demand, it is the second highest cheese exports for the month of February in history. This clearly indicates international cheese demand remains good despite a higher U.S. price than world price and despite the high U.S. Dollar. We need to look at this as a real victory.
However, the same cannot be said for butter. February butter exports totaled 2,550.7 metric tons, down 71.7% from last year. These are the lowest butter exports for February since 2010 and the lowest exports since September 2014. This certainly is not good. Comparing the current U.S. butter price of $1.7525 to the latest Global Dairy Trade auction price of $1.48 is not helping to spur international interest.
February whey exports declined 15.7% totaling 33,167.1 metric tons and the lowest February exports since 2012. Nonfat dry milk exports were able to hold fairly well totaling 35,609.8 metric tons, down 1.5% and the lowest February exports since 2013. Nonfat dry milk is competitive on the world market as price is closely aligned with world price. However, domestic price is struggling with Grade A nonfat dry milk price on the daily spot market falling to 93 cents last week and the lowest futures price since early August of 2009.
The bottom line is that the current weakness in GDT auction prices does not provide much hope for high dairy product prices and milk prices. However, if GDT prices find support and would trend higher and remain that way, it will improve the outlook for milk prices immensely. According to some world price forecasts, this may not materialize the rest of this year. So far, U.S. dairy prices have held better than many had expected. If we have already seen the lows for prices this year, we can count our blessings. But who knows, things may change significantly as the year progresses.
-March Milk Production report on April 21
-March Cold Storage report on April 22
-March Livestock Slaughter report on April 23
-Annual Livestock Slaughter report for 2014 on April 27
Robin Schmahl is a commodity broker and owner of AgDairy LLC, a full-service commodity brokerage firm located in Elkhart Lake, Wisconsin. He can be reached at 877-256-3253 or through their website at www.agdairy.com.
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