Imports and Exports - not much change

Updated data on dairy exports and imports became available during the first week in September.  They show some variations, but generally follow the pattern of the prior 12 months.  The value of U.S. exports began falling in 2014 and in mid 2015 reached a level near half of the 2014 high point.  Since mid 2015, the value of dairy exports has remained relatively stable.  U.S. prices for cheese and butter remain well above international values, which makes exports difficult.

New data also became available this week for U.S. production of cheese and butter.  The charts in the prior post have been updated to reflect this.  They do confirm high levels of production and combined with the low levels of exports, are increasing the inventories as reviewed in that post.  Imports also remain at record levels.

Exchange rates continue to increase the difficulty of selling in the international markets.  The New Zealand dollar has strengthened somewhat, but the Euro remains weak compared to the USD.

Cheese exports in July did show a slight improvement over June, but remain lower than the prior three years and are at the same level as the first six months of 2016.

Imports also continue to follow the prior six-month trends.  These imports are coming from a variety of European countries and New Zealand.

The combination of exports and imports show a slowly improving trend in net exports.  However, the numbers are still far below 2014 levels.  

Butter net exports remain at levels below the prior four years.  Exports remain near zero and imports remain static.  For more detail on butter pricing see the August 21, 2016 post to this blog.

Other dairy commodities that are used in calculating producer prices include NDM and Dry Whey.  There is little change in the exports and imports of these products, so no new charts are shown.

Exchange rates continue to have an impact on dairy exports and imports.  The USD/Euro exchange rates remain largely unchanged as the European economy continues to struggle.  However, there is some significant strengthening in the NZD.  This is putting extreme pressure on New Zealand producers as their oversupply continues to struggle to find a home at profitable prices.  New Zealand is extremely dependent on exports, as approximately 80% of the production must find a home in the international markets.

The conclusions from all this data and other forecasts is that the international markets are not yet providing much relief that will improve prices and volumes of U.S. dairy exports.  New Zealand appears to be reducing production and European production continues to decline.  However, production must decline further to reduce the excesses.

The growth in U.S. inventories of cheese and butter are especially alarming.   The high inventories will make price increases unlikely and lower prices probable.  These inventories can only be brought in line by significantly lower prices on international sales or reduced production of cheese and butter.  The global markets appear to be moving in the direction of bring supply in line with demand, but there needs to be further reductions.  Excess inventories need to be deplenished before real and lasting pricing improvement can take place.