Export and Import data for February is now available. The charts below show significant gains in exports. However, imports are still strong and taking a toll on the balance of exports and imports. The U.S. remains a net importer of butter. The gains in butter exports shown in the Chart I below, are against a base of almost no exports, so while the percentage gain looks significant, there are still practically no butter exports. Most importantly, the gain in cheese exports and the reduced cheese imports are impactful and will help keep cheese inventory levels from rising further.
Cheese exports grew nicely in February, but were still well below 2014/15 levels.
While exports YTD to Mexico are down vs. the prior year, increased exports of cheese to Korea, Australia, Canada, and China more than made up the difference. A more diversified customer base is always a good thing.
Imports of cheese were down from January and from the prior two years. This is another good sign.
Most of the reduction in cheese imports has come from New Zealand.
Butter exports remain very low, well below the prior year, as exports to Mexico are running behind the prior year.
The price of U.S. butter remains high at $2.17/lb., which keeps exports uncompetitive in the international markets.
Imports of butter have decreased somewhat but are still much larger than exports of butter. The imports from New Zealand and Mexico are down significantly but imports from Ireland are steady and new imports from Chili have kept imports of butter significant (Chart X below). As a result, butter net exports are a negative value as the U.S. remains a net butter importer.
In terms of volume, exports of NDM remain at record levels. Chart XII below show the exports of NDM since 2000. They have increased consistently with no end in sight.
Unfortunately the price of NDM is not attractive. At less than $1/lb., NDM is selling at half the price levels of 2008 and 2014.
In order to provide increasing butterfat for churning, the pressure remains on finding new markets for NDM. Mexico remains the best customer for NDM purchases, however, to keep expanding sales of NDM new markets must be developed.
The U.S continues to buy significant NDM from other countries such as New Zealand, Canada, Chili, and others. Imports are about two thirds the level of exports as international prices are low and there is a lot of product for sale.
Exchange rates have not been reviewed in the blog for a few months as there has been no significant changes. There are four charts below, which cover the other major dairy exporters and the U.S. dairy imports. The USD remains strong and there has been little change in the last few months.
February was a good month for exports. However, the international markets are still difficult. The USD is strong, the U. S. supply of milk continues to grow, and New Zealand, Europe, and Australia are again starting to increase the global supply of milk. At the same time, U.S. consumers are drinking less milk. The TPP was not good for the U.S. dairy industry and has been terminated. Also, NAFTA is being challenged in Canada and may be changing in Mexico. The possible change of California to an FMMO creates some more uncertainly in a geographical area with a strong history of exports and a future potential for increased exports.
The good news is the U.S. Dairy Export Council has an excellent new CEO with a proven track record. Tom Vilsack brings new life to the organization.
Changing events will continue to be followed in this blog.