global dairy market outlook - farm office
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Global Dairy Market OutlookU.S. Dairy Export Council
U.S. DAIRY EXPORT COUNCIL 2
2020: Year of Volatility
U.S. DAIRY EXPORT COUNCIL 3
Volatility Certainly Applied to U.S. Dairy Pricing
$1,000
$2,000
$3,000
$4,000
$5,000
$6,000
$7,000
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
U.S. Product Prices
Cheddar: Block/Barrel Avg NFDM Butter - 80%
Source: USDEC, Understanding Data & Markets
U.S. DAIRY EXPORT COUNCIL 4
But Less So on World Market
$1,000
$1,500
$2,000
$2,500
$3,000
$3,500
$4,000
$4,500
$5,000
$5,500
$6,000
2015 2016 2017 2018 2019 2020
USD
/MT
World Benchmark Prices
Gouda - EU SMP - EEX Butter - GDT WMP - GDT
Source: USDEC, Understanding Data & Markets
U.S. DAIRY EXPORT COUNCIL 5
Global Demand Steady to Accelerating
Source: USDEC, Trade Data Monitor
U.S. DAIRY EXPORT COUNCIL 6
China, MENA Driving Growth
-100,000
-50,000
0
50,000
100,000
150,000
200,000
China MENA CIS SEA Oceania Japan+Korea SSA LatAm (excl.MX)
Mexico Other
MT
YOY Change in Dairy Trade by Destination (Jan-Aug 2020)
Source: USDEC, Trade Data Monitor
U.S. DAIRY EXPORT COUNCIL 7
2/3 of China’s Growth is Due to Whey Recovery
Source: USDEC, Trade Data Monitor
U.S. DAIRY EXPORT COUNCIL 8
But Even Excluding Whey to China – Int’l Demand Has Been Good
0.0%
5.0%
10.0%
15.0%
20.0%
25.0%
30.0%
0
25,000
50,000
75,000
100,000
125,000
150,000
SMP Cheese WMP Whey - 0404.10 Butterfat Lactose MPC WPC80+
2020 YTD YOY Change in Global Trade by Product(Jan-Aug)
YTD Volume Change YTD % Change
Source: USDEC, Trade Data Monitor
Where Do We Go From Here?
U.S. DAIRY EXPORT COUNCIL 10
More Milk Inbound From Major Players
-1.0%
-0.5%
0.0%
0.5%
1.0%
1.5%
2.0%
2.5%
3.0%
-2,000
-1,000
0
1,000
2,000
3,000
4,000
5,000
6,000
H1 '17 H2 '17 H1 '18 H2 '18 H1 '19 H2 '19 H1 '20 H2 '20f H1 '21f H2 '21f
YOY Change in Milk Production Among Major Exporters
U.S. EU27+UK NZ Aus Arg Bel Big 6 (RHS)
Source: USDEC, Understanding Data & Markets
U.S. DAIRY EXPORT COUNCIL 11
Regions to Watch: 4 Key Questions
U.S. DAIRY EXPORT COUNCIL 12
What is China’s Milk Powder Appetite?
Source: USDEC, Trade Data Monitor
U.S. DAIRY EXPORT COUNCIL 13
What Should We Make of MENA’s Resurgence?
Source: USDEC, Trade Data Monitor
U.S. DAIRY EXPORT COUNCIL 14
Will U.S. Remain Preferred SMP Supplier to SEA?
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
50%
2015 2016 2017 2018 2019 2020
SEA NFDM/SMP Market Share by Supplier
USA EU NZ Other
Source: USDEC, Trade Data Monitor
U.S. DAIRY EXPORT COUNCIL 15
What is the State of Mexican Demand in 2021?
Source: USDEC, Trade Data Monitor
Wildcards
U.S. DAIRY EXPORT COUNCIL 17
U.S. Cheese Priced Well Above World Markets
$2,000
$2,500
$3,000
$3,500
$4,000
$4,500
$5,000
$5,500
$6,000
2016 2017 2018 2019 2020
USD
/MT
Cheese Price Comparison
Cheddar - US Cheddar - GDT Cheddar - EU
Source: USDEC, Understanding Data & Markets
U.S. DAIRY EXPORT COUNCIL 18
Brexit: Impact on Dairy Markets
U.S. DAIRY EXPORT COUNCIL 19
India to Subsidize SMP Exports (est. 20K+ MT)
U.S. DAIRY EXPORT COUNCIL 20
Covid-19 and the Economic Implications
Source: New York Times, Nov 12, 2020
