u.s. dairy market outlook and what it means to california(wmp) production is exported. meanwhile,...

U.S. Dairy Market Outlook and What it Means to

California

Mary Ledman, Dairy Economist [email protected]

847-680-9693

o  U.S. & Regional Milk Produc5on o  Global Dairy Update o  U.S. Dairy Exports o  Dairy Product Produc5on and Stocks o  Outlook

Outline

April 25, 2013 Daily Dairy Report, Inc. 2

U.S. Milk Production

14,000

15,000

16,000

17,000

18,000

Jan Apr Jul Oct

(Mill

ion

Lbs.

)

2011 2012 2013

Chg. vs. Feb. '13 +1.3% Chg. vs. Mar. '12 -0.3% YTD Avg. +0.0%


U.S. Milk Per Cow

1,500

1,600

1,700

1,800

1,900

Jan Apr Jul Oct

(Pou

nds)

2011 2012 2013

Chg. vs. Jan. ’13 +1.8% Chg. vs. Feb. ’12 +0.3% YTD Avg. +0.5%


U.S. Dairy Herd

9,000

9,100

9,200

9,300

Jan Apr Jul Oct

(1,0

00 h

ead)

2011 2012 2013

Chg. vs. Jan. ’13 +0.0% Chg. vs. Feb. ’12 -0.3% YTD Avg. -0.3%


Regional Milk Production

o  Key States: New York, Pennsylvania, Vermont

o  26.3 billion pounds 2012 o  More than 40% of milk used

in fluid market o  Yogurt focus o  Balancing with power plants

Northeast Milk Production

1,900

2,000

2,100

2,200

2,300

Jan Apr Jul Oct

(mill

ion

lbs.

)

2011 2012 2013

Chg. vs. Feb. ’13 +0.9% Chg. vs. Mar. ’12 +1.3% 2013 YTD +1.7%


o  Key States: Michigan, Minnesota, Wisconsin

o  45.1 billion pounds in 2012 o  85% of milk used in cheese/

whey and butter production o  U.S. cheese production 35% o  U.S. butter production 25% o  New SMP plant in Michigan

May 2012 capacity 4 million pounds of milk per day

Midwest Milk Production

3,300

3,450

3,600

3,750

3,900

Jan Apr Jul Oct

(mill

ion

lbs.

)

2011 2012 2013

Chg. vs. Feb. ’13 +0.3% Chg. vs. Mar. ’12 +2.8% 2013 YTD +3.7%


o  Represents Arizona, New Mexico, Texas

o  22.3 billion pounds 2012 o  More than 35% of milk used

in fluid market o  Large manufacturing plants >

4,000 metric tons per day •  Southwest Cheese •  Hilmar Cheese –Dalhart

Southwest Milk Production

1,500

1,650

1,800

1,950

2,100

Jan Apr Jul Oct

(mill

ion

lbs.

)

2011 2012 2013

Chg. vs. Feb. ’13 +1.2% Chg. vs. Mar. ’12 -3.4% 2013 YTD -1.9%


o  Key States: California, Idaho, Washington

o  61.6 billion pounds in 2012 o  33% of Total U.S. Production o  U.S. SMP/NDM production

75% of and exports more than 50% of its SMP/NDM production

o  50% of U.S. butter production o  30% of U.S. cheese

production

Western Milk Production

4,400

4,650

4,900

5,150

5,400

Jan Apr Jul Oct

(mill

ion

lbs.

)

2011 2012 2013



o  Production down 3.3% vs. March 2013, driven primarily by lower milk per cow.

o  Dairy herd 1,782,000 as of February 2013, down 2,000 head vs. last year.

o  Potential for significant year-over-year increases in production during 2H of 2013. •  Profitability •  Weather?

California Milk Production

3,000

3,200

3,400

3,600

3,800

Jan Apr Jul Oct

(mill

ion

lbs.

)

2011 2012 2013



Weekly Slaughter

40

45

50

55

60

65

70

75

1/5 2/5 3/5 4/5 5/5 6/5 7/5 8/5 9/5 10/5 11/5 12/5

(in 1,000 head)

2011 2012 2013

-‐4

-‐3

-‐2

-‐1

0

1

2

3

4

5

5-‐Jan 19-‐Jan 2-‐Feb 16-‐Feb 2-‐Mar 16-‐Mar 30-‐Mar

(1,000 Head)

West East Midwest


Overland Stockyard Sales Date Sales Descrip6on

April 12 900 milking, 200 replacements

April 3 2,000 head

March 28 12,000 head

March 15 3,000 milking, 3,000 replacements

March 1 1,500 head

February 28 10,000 head

February 20 4,500 milking

February 12 3,550 head replacements

February 8 2,300 Holstein cows, 1,450 Jersey & Jersey X

February 6 2,600 head


Income Over Feed Key States

$0

$3

$6

$9

$12

Q1 12 Q2 12 Q3 12 Q4 12 Q1 2013

California

Regional Milk Over Feed(in $ per cwt.)

$0

$3

$6

$9

$12

Q1 12 Q2 12 Q3 12 Q4 12 Q1 2013

Wisconsin


$0

$3

$6

$9

$12

Q1 12 Q2 12 Q3 12 Q4 12 Q1 2013

New York


$0

$3

$6

$9

$12

Q1 12 Q2 12 Q3 12 Q4 12 Q1 2013

Idaho


Daily Dairy Report, Inc. April 25, 2013 14

Global Dairy Markets Why Should I Care?

0

40,000

80,000

120,000

160,000

(1,000 M

etric

Ton

s)

2007 (f) 2012

Global Milk Production: Key Countries


Global Dairy Production vs. Exports: Key Countries

8.6 9.5

19.4

38.1

3.6 4.4 1.6 3.3

0

10

20

30

40

50

NDM WMP Bu\er Cheese

(Bil. Lbs.)

Produc5on Exports


Global Trade Statistics o  New Zealand produces less than 5% of global milk production but

accounts for more than 50% of dairy product trade. o  The European Union and the United States represent 30% and 20% of

global cow’s milk production. o  Over 40% of global Nonfat Dry Milk (NDM) and Whole Milk Powder

(WMP) production is exported. Meanwhile, only about 10% of global cheese and butter production is exported.

o  New Zealand dominates global WMP production with nearly a 30% share followed by China with a 27% share.

o  The European Union and the United States dominate NDM production and trade.

•  The European Union produces 33% of the world’s NDM and accounts for 36% of global NDM trade.

•  The United States produces 25% of the world’s NDM and accounts for 28% of global trade.

o  FAO estimates that 7% of global milk production is traded.

18 Daily Dairy Report, Inc. April 25, 2013

Global Milk Production

30,000

40,000

50,000

JAN APR JUL OCT

Chart Title

2011 2012 2013

Milk Produc6on (AR,AU,EU,NZ,US) (30-‐day month, in million lbs.)


Change in YOY Global Milk Production

-‐500

0

500

1,000

1,500

2,000

Jan-‐12 Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan-‐13 Feb

(Million Lbs.)

YOY Chg Global Produc5on 4-‐Year Average Change


Export Summary Through February 2013

Million Lbs. % exports vs. 2012 % of Produc5on

NFDM/SMP 147.3 -‐14% 40%

Bu\er/Milkfat 19.9 +36% 5.2%

Total Cheese 96.1 +11% 5.4%

Cheddar Cheese 20.9 +1% 3.9%

Dry Whey (human) 77.4 -‐7.8% 45%

WPC (< 80%) 37.8 +46% 53%

Milk and Whey Protein > 80%

6.6 +2.3% 50% of WPI produc5on

Lactose > 99% 81.6 +40% *combined equates

Lactose < 99% 42.8 -‐14% To 75% of lactose produc5on


$0.90$1.15$1.40$1.65$1.90$2.15$2.40$2.65

$2.90

Jan-‐12 Apr-‐12 Jul-‐12 Oct-‐12 Jan-‐13 Apr-‐13

International Price for SMPWorldBi-‐Weekly SMP Price(in USD per lb.)

NZ

GDT

EU NDPSR


$1.40

$1.65

$1.90

$2.15

Jan-‐12 Apr-‐12 Jul-‐12 Oct-‐12 Jan-‐13 Apr-‐13

TitleOceania Europe (Edam) CME

WorldBiweekly Cheese Price(in USD per lb.)


Domestic Demand

0.30%

2.10%

2.60%

1.10%

0.40% 0.50%

2.20%

1.00% 1.10%

0.20% 0.50%

0.60%

0.0%

-0.3%

-2.4%

-1.9%

-0.6%

-2.1% -2.5%

-2.2%

-1.0%

-1.8%

-1.3%

-1.8%

-0.1%

-1.9%

-1.0%

-2.3% -1.9%

-1.3% -1.6%

-1.2%

-2.3%

-1.3% -1.6%

-3.9%

-2.4% -2.7%

-3.1%

-2.1% -2.3%

-0.1%

-1.8%

-0.1%

-1.5%

-0.1%

-1.7%

-2.2% -2.1%

-5.00%

-4.00%

-3.00%

-2.00%

-1.00%

0.00%

1.00%

2.00%

3.00%

Jan - 09 Jul Jan - 10 Jul Jan - 11 Jul Jan - 12 July Jan-13

Year%over%Year(Percentage(Change(of(Pounds(of(Fluid(Milk(Sales(by(Month((Federal(Milk(Market(Order(&(California)(

Fluid Milk Sales


Commercial Disappearance

o  Jan. – Dec. 2012 +1.7% Butter +1.6% American Cheese +2.0% Other Cheese +1.6% NDM +17.9% Fluid Milk -1.9%

o  Nov. – Jan. 2013 +0.6% Butter -14.8% American Cheese +1.7% Other Cheese +1.2% NDM -33.6% Fluid Milk -2.1%


Dairy Product Production & Stocks

U.S. Butter Production

100

125

150

175

200 Ja

n

Apr

Jul

Oct

(mill

ion

lbs.

)

2011 2012 2013

Chg. vs. Jan. '12 +0.8% Chg. vs. Feb. '13 +4.7% 2013 YTD +4.4%


Total Butter Stocks

0

100

200

300 Ja

n

Apr

Jul

Oct

(mill

ion

lbs.

)

2011 2012 2013

Chg. vs. Feb. '13 +22.4% Chg. vs. Mar. '12 +6.9%


Butter & Milkfat Exports

-

5.0

10.0

15.0

20.0 Ja

n

Apr

Jul

Oct

(mill

ion

Lbs.

)

2011 2012 2013

Chg. vs. Jan. '13 +21% Chg. vs. Feb. '12 +30% 2013 YTD +36%


American Cheese Production

320

340

360

380 Ja

n

Apr

Jul

Oct

(mill

ion

lbs.

)

2011 2012 2013

Chg. vs. Jan. '13 +2.1% Chg. vs. Feb. '12 +4.9% 2013 YTD +3.8%


American Cheese Stocks

550

600

650

700 Ja

n

Apr

Jul

Oct

(mill

ion

lbs.

)

2011 2012 2013

Chg. vs. Feb. '13 +2.9% Chg. vs. Mar. '12 +4.5%


Total Cheese Exports

-

25.0

50.0

75.0 Ja

n

Apr

Jul

Oct

(mill

ion

Lbs.

)

2011 2012 2013

Chg. vs. Jan. '13 +9.1% Chg. vs. Feb. '12 +8.7% 2013 YTD +11%


NFDM/SMP Production

75

125

175

225 Ja

n

Apr

Jul

Oct

(mill

ion

lbs.

)

2011 2012 2013

Chg. vs. Jan. '13 +4.9% Chg. vs. Feb. '12 -1.6% 2013 YTD -1.6%


California Milk Powder Production

0

20

40

60

80

100

120

Jan Apr Jul Oct

(Million Lbs.)

2012 2013


NFDM Stocks

50

100

150

200

250 Ja

n

Apr

Jul

Oct

(mill

ion

lbs.

)

2011 2012 2013

Chg. vs. Jan. '13 +13.6% Chg. vs. Feb.'12 +16.5%


NDM/SMP Exports

0

50

100

150 Ja

n

Apr

Jul

Oct

(mill

ion

lbs.

)

2011 2012 2013

Chg. vs. Jan. '13 +23% Chg. vs. Feb. '12 -8.5% 2013 YTD -14%


2013/14 Outlook

Bullish o  Lower global milk production o  Negative weather conditions o  Drought in Oceania o  Late Spring in Europe and United

States o  Higher feed costs and lack of

quality forages in 1H 2013 limit growth in milk per cow during Q2 2013.

o  Strong exports

Bearish/Moderating o  Higher milk prices and lower feed

costs could lead to greater milk production during Q3 2013 and lower milk prices during Q4 2013 and into 2014.

o  Oceania drought subsiding o  Bumper corn and bean crops o  Moderating alfalfa prices o  Global economy slow down;

namely China’s expected growth slowing to 7.7%

o  Strength of US dollar vs. competitive currencies


u.s. dairy market outlook and what it means to california(wmp) production is exported. meanwhile,...

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