Global Dairy Market Outlook
A monthly take on global dairy trade, international market drivers and U.S. performance.
Global milk production is at its annual trough, but orders are seasonally slow as buyers prefer to go hand-to-mouth until they get a better feel for the new Southern Hemisphere season starting in the second half of August. In this thinly-traded period, the global markets are steady. In the months ahead, much will depend on the how aggressively China continues to buy.
U.S. exporters moved record volumes (again) in May, led by continued heavy NDM/SMP sales. We expect U.S. volumes to remain strong in the months ahead.
The market situation and psychology has shifted dramatically since early March, as the widely reported New Zealand drought sent Oceania prices rallying to record highs. Many buyers were caught short by the rapid market turnaround, and now are scrambling to get coverage in a rising market. We expect to see undersupplied conditions through the second and third quarters as buyers cope with declining production in Oceania, Europe and elsewhere.
U.S. dairy exports got off to a good start in the early months of 2013, with volume and value improved from prior months. Pricing relationships were more favorable for U.S. suppliers in February, and tight supply from competing exporters has buyers looking to the United States.
In December, New Zealand exports of milk powder, cheese, butterfat and whey were more than the EU, United States and Australia combined, but drought on the North Island has brought a quick end to the production season. Though buyers are mostly covered into Q2, the prospect of tighter supplies over the next few months is firming the markets. Oceania prices continue to rise, closing the gap with Europe and the United States.
U.S. exports in December were the lowest in more than two years. We expect U.S. volumes to pick up as U.S. prices realign with world prices.
The January issue of USDEC’s Global Dairy Market Outlook, a monthly take on global dairy trade, international market drivers and U.S. performance. The report has been scaled back this month to give you a quicker synopsis.
The global markets are steady, with modestly improved orders after the holidays. Buyers are still working off pipeline holdings and aren’t particularly aggressive in purchasing ahead. Oceania’s flush was strong, and U.S. milk production bounced back in the last two months of 2012, alleviating some concern of a near-term supply pinch. However, we maintain our view that the world markets will be undersupplied in the months ahead.
U.S. exports were lighter in November – overall, the lowest in more than two years. In the second half of 2012, U.S. exporters lost share to more aggressive Oceania suppliers.