Trading into the weakest global dairy market in more than a decade, U.S. dairy exports declined in 2015, ending a streak of five straight years of expansion, according to Alan Levitt, market analyst with the U.S. Dairy Export Council (USDEC).
Dairy export sales value totaled $5.24 billion last year, down 26 percent from 2014’s record level. Overall export volume was off 8 percent, at 3.645 billion pounds of milk solids (total-solids basis). Export volume represented 14 percent of U.S. milk production in 2015, down from 15.3 percent in 2013-2014.
A combination of factors came together to alter the supply-demand balance last year, creating a fierce competitive environment, Levitt explained. China milk powder demand plunged; Russia banned dairy product imports from Europe; and milk supply in Europe grew dramatically when production quotas came off. Meanwhile, the West Coast port slowdown hampered U.S. sales early in the year, and strong domestic demand kept U.S. prices for cheese and butterfat above world-market values.
As a result, U.S. exporters lost shares in key markets across Asia and the Middle East and North Africa region across nearly all product segments. Instead, suppliers focused on sales of nonfat dry milk/skim milk powder (NDM/SMP) and cheese to Mexico, South America and the Caribbean.
Total exports of NDM/SMP reached a new high of 559,735 tons (1.23 billion pounds) last year. Most other categories, however, fell into a lower gear.
“Over the last decade, the world marketplace for dairy has been primarily a buyers’ market, favorable for U.S. exporters,” Tom Suber, USDEC president, said. “2015 was more of a sellers’ market, and 2016 is shaping up to be more of the same. U.S. suppliers have to understand that this may be the ‘new normal’ for a while, and they’ll need to be particularly aggressive to compete with exporters from Europe and Oceania.”
Longer term, however, USDEC is confident global dairy demand will again pressure available milk supplies. PD
2015 U.S. dairy export highlights
- Exports were valued at $5.24 billion, down 26 percent from 2014’s record high.
- Export volume was 3.6 billion pounds of total milk solids, down 8 percent from 2014.
- U.S. dairy imports were unchanged, at $3.54 billion. On a volume (total solids) basis, imports increased 13 percent from 2014, to 930 million pounds.
- U.S. dairy export volume in 2015 (total milk solids) equated to 14 percent of U.S. milk solids production, down from 2013-2014, when 15.3 percent of U.S. solids headed overseas. Exports represented 54.5 percent of the NDM/SMP produced in the U.S. last year, 40 percent of the dry whey, 6 percent of the cheese and 2.6 percent of the butter.
Source: U.S. Dairy Export Council
—Compiled by Progressive Dairyman staff