!!whatdoes!being!aglobal!player! mean!to!the!u.s.!dairy!sector?!! plus... · 2014. 12. 8. ·...

What Does Being a Global Player Mean to the U.S. Dairy Sector?

Mary Ledman, Dairy Economist [email protected]

Global Considerations

2 Copyright of Daily Dairy Report, Inc.

A Decade of Change

-

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

4,500

$0

$1,000

$2,000

$3,000

$4,000

$5,000

$6,000

$7,000

$8,000

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

(Mill

ion

Lbs.

)

(Mill

ion

$)

Value Volume

Copyright Daily Dairy Report, Inc. 3

YTD October 2014 Exports

4

Million Lbs. % vs. 2013 % of ProducPon

NDM/SMP 1.034 +1% 54%

BuUer/Milkfat 144 -‐10% 9.4%

Total Cheese 698 +23% 7.4%

Cheddar Cheese 150 +23% 5.5%

Dry Whey (human) 435 +2% 61%

WPC (< 80%) 189 -‐10% 43%

Milk and Whey Protein > 80%

50.4 +29%

72% of WPI producPon

Lactose > 99% 394

-‐5%

*combined equates

Lactose < 99% 238

2%

to 65% of lactose producPon

Copyright of Daily Dairy Report, Inc.

Key U.S. Export Markets

SMP/NDM Cheese Butterfat WPC Dry Whey

Mexico Mexico Saudi Arabia

China China

China S. Korea Morocco Mexico Mexico

Philippines Japan Iran Canada Canada

Indonesia Canada Egypt Japan Japan


Source: USDA FAS

76.4

21.5

202

18.7

24.8

27

42.3 71.4

16.7

127.4

306.9

(in billion pounds)

69.7

Global Milk ProducPon: Select Countries

Copyright of Daily Dairy Report, Inc. 6

Global Milk ProducPon: Select Countries

Source: USDA FAS

0

50

100

150

200

250

300

350

(Billion Po

unds)

2007 (f) 2013

20%

4%

13%

30%

7 Copyright of Daily Dairy Report, Inc. 7

Selected Country Milk ProducPon (2008 to 2013)

-‐1.0%

-‐0.8%

-‐0.6%

0.2%

0.5%

0.6%

0.7%

0.8%

1.2%

3.1%

4.1%

4.2%

5.4%

-‐2.0% -‐1.0% 0.0% 1.0% 2.0% 3.0% 4.0% 5.0% 6.0%

Japan

Ukraine

Russia

China

Australia

Canada

Mexico

EU-‐27

United States

Brazil

Argentina

New Zealand

India

Compounded Annual Growth Rate (CAGR)

Source: USDA FAS Copyright of Daily Dairy Report, Inc. 8

Where’s the Growth?

-‐5 0 5 10 15 20 25 30 35

Former S.U.

China

New Zealand

United States

EU 27

S. American

India

Change in Milk Supply 2013 vs. 2008(in billion pounds)


-‐10 0 10 20 30 40 50

Former S.U.China

New ZealandUnited States

EU 27S. American

India

Change in Milk Supply (in billion pounds)

*2015-‐2020

2008-‐2013

Where’s the Future Growth?


Source: IFCN

USD$/100kg milk (energy corrected milk)

>$60<=$120

>$50<=$60

>$40<=$50

>$30<=$40

>$20<=$30

<=$20

Dairy Cost of ProducPon


Dairy Cost of ProducPon

Feed 37% • Purchased • Grown • Grazed Labor 12% Fuel/Energy 1% Land/Rent 4% Financing 2% Other 37% Overhead 7%

Low Cost (ArgenPna)

Feed 54% • Purchased 34% • Grown 20% • Grazed 0% Labor 15% Fuel/Energy 3% Land/Rent 0% Financing 0% Other 11% Overhead 17%

Mid Cost (U.S.A)

Feed 20% • Purchased 14% • Grown 5% • Grazed 1% Labor 21% Fuel/Energy 4% Land/Rent 2% Financing 3% Other 41% Overhead 9%

High Cost (Europe)

Source: USDA, Eurostat, Agrivalue S.A. Copyright of Daily Dairy Report, Inc. 12

Global Dairy Trade: Selected Countries

0 5 10 15 20 25 30 35 40

NDM

WMP

BuUer

Cheese

(Billion Pounds)

Trade ProducPon

o  Over 40% of global NDM and WMP producPon is exported.

o  Meanwhile, only about 10% of global cheese and buUer producPon is exported.

o  FAO esPmates that 7% of global milk producPon is traded.

Source: USDA FAS 13 Copyright of Daily Dairy Report, Inc. 13

Global Dairy Product ProducPon and Exports

-‐

500

1,000

1,500

2,000

2,500

3,000

U.S. EU 27 India N.Z. Aus

(Million Lbs.)

Nonfat Dry Milk

ProducPon Exports

-‐

500

1,000

1,500

2,000

2,500

3,000

3,500

NZ China EU 27 Brazil ArgenPna

(Million Lbs.)

Whole Milk Powder

ProducPon Exports

Copyright of Daily Dairy Report, Inc. Source: USDA FAS 14

Global Dairy Product ProducPon and Exports

15

-‐

2,000

4,000

6,000

8,000

10,000

12,000

India EU 27 U.S. N.Z.

(Million Lbs.)

BuMer

ProducPon Exports

-‐

5,000

10,000

15,000

20,000

25,000

EU 27 U.S. Aus N.Z.

(Million Lbs.)

Cheese

ProducPon Exports


The China Factor

o  China’s combined imports of NDM and WMP have doubled since 2011.

o  The milk equivalent of China’s esPmated 2014 powder imports is nearly 20 billion pounds. Just the increase in China’s imports in 2013 was equal to 4 billion pounds of milk.

o  As New Zealand has become the dominate supplier of WMP to China, that has allowed the U.S. exports of NDM to grow in other Asian markets.

16

0

500

1,000

1,500

2,000

2,500

(Million Lbs.)

WMP NDM


The China Factor


0

10

20

30

40

50

60

70

80

90

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

Million Lbs.

Chinese SMP Imports

2011 2012 2013 2014

0

50

100

150

200

250

300

Jan

Feb

Mar

Apr

May

Jun Jul

Aug

Sep

Oct

Nov

Dec

Million Lbs.

Chinese WMP Imports

2011 2012 2013 2014

Global Milk Production

18 Copyright Daily Dairy Report, Inc.

40,000

50,000

60,000

JAN APR JUL OCT

Chart Title2012 2013 2014

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

So how much milk is that?


(In Billion Pounds)

(3,000)

(2,000)

(1,000)

-‐

1,000

2,000

3,000

4,000

Jan-‐10 Jun Jan-‐11 Jun Jan-‐12 Jun Jan-‐13 Jun Jan-‐14 Jun

U.S. Milk Production


14,50015,00015,50016,00016,50017,00017,50018,000

JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC

2012 2013 2014

U.S. Milk Production(30-‐daymonth, in million lbs.)

October YOY Change in Milk ProducPon


0.0%2.0%4.0%6.0%8.0%10.0%12.0%14.0%

TX CO UT

MI

KS ID FLWA SD IA VT PA NY

OH

MN AR CA WI

IN VA NM OR IL

YOY Chg

WPI 90 (30-‐day month) November Change in Milk ProductionWPI 90 (30-‐day month) October Change in Milk Production

U.S. Dairy Cows


9.1

9.2

9.3

JAN APR JUL OCT

2012 2013 2013E 2014

U.S. Dairy Cows(in million head)

Fewer Happy Meals?


150170190210230250270290310

JAN APR JUL OCT

2012 2013 2014

Monthly U.S. Dairy Cattle Slaughter(30-‐day month, in 1,000 head)

Income Over Feed Key States


$0$2$4$6$8$10$12$14$16$18$20

1H 14 Q3 14 10/1/2014

National California Wisconsin New York Idaho

Regional Actual Dairy Production Margin(in $ per cwt.)

Daily Dairy/KLA, Inc. 25

$0

$3

$6

$9

$12

Q1 2012 Q2 2012 Q3 2012 Q4 2012

California

Regional Milk Over Feed(in $ per cwt.)

$0

$3

$6

$9

$12

Q1 2012 Q2 2012 Q3 2012 Q4 2012

Wisconsin


$0

$3

$6

$9

$12

Q1 2012 Q2 2012 Q3 2012 Q4 2012

Idaho


$0

$3

$6

$9

$12

Q1 2012 Q2 2012 Q3 2012 Q4 2012

New York


February 2013

Income Over Feed Key States

USDA All-Milk Price


$11

$15

$19

$23

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

*

2015

*

$/cw

t

USDA is forecasPng a 20% reducPon in All Milk Price but New Zealand is looking for a 40% reducPon, which would yield $14 All Milk Price

Milk Price Comparisons


2013 Lower European Production & New Zealand Drought Higher Global Powder Prices

U.S. 2012 Drought Higher Cheese & Butter Prices

20

24

28

32

36

40

44

48

Jan-‐10

Mar

May

Jul

Sep

Nov

Jan-‐11

Mar

May

Jul

Sep

Nov

Jan-‐12

Mar

May

Jul

Sep

Nov

Jan-‐13

Mar

May

Jul

Sep

Nov

Jan-‐14

Mar

May

Jul

Sep

(Euro Ce

nts p

er Lite

r)

Germany -‐ Bayern New Zealand United States

Global Dairy Product Price Comparisons


$1.40

$1.65

$1.90

$2.15

$2.40

$2.65

Jan-‐14 Mar-‐14 May-‐14 Jul-‐14 Sep-‐14 Nov-‐14

TitleOceania German (Edam) CME

Weekly World Cheese Price(in USD per lb.)

$0.90$1.15$1.40$1.65$1.90$2.15$2.40$2.65$2.90$3.15$3.40

Jan-‐14 Mar-‐14 May-‐14 Jul-‐14 Sep-‐14 Nov-‐14

Oceania German CME GDT

WorldBi-‐Weekly Butter Price(in USD per lb.)

Dairy Product Production, Stocks, and Exports


U.S. Cheese Production & Stocks


800

850

900

950

1,000

JAN APR JUL OCT

2012 2013 2014

Total Cheese Production(30-‐day month, in million lbs.)

Sour Cream WPI 90 (30-‐day month) Sour CreamSour Cream(30-‐day month, in million lbs.)

LactoseWPI 90 (30-‐day month) Lactose StocksWPI 90 (30-‐day month) U.S. Lactose StocksTotal Cheese Production(30-‐day month, in million lbs.)

900950

1,0001,0501,1001,1501,200

JAN APR JUL OCT

2012 2013 2014

U.S. Stocks of Total Cheese(in million lbs.)

American Cheese Production & Stocks


310320330340350360370380390

JAN APR JUL OCT

2012 2013 2014

American Cheese(30-‐day month, in million lbs.)

550

600

650

700

750

JAN APR JUL OCT

2012 2013 2014

U.S. Stocks of American Cheese(in million lbs.)

US Cheese Exports


01020304050607080

JAN APR JUL OCT

2012 2013 2014

U.S. Cheese &Curd ExportsWPI 90 (30-‐day month) U.S. Cheese & Curd ExportsWPI 90 (30-‐day month) U.S. Cheese & Curd Exports(30-‐day month, in million lbs.)

0

10

20

30

JAN APR JUL OCT

2012 2013 2014

U.S. Cheese &Curd ExportsWPI 90 (30-‐day month) U.S. Cheese & Curd ExportsWPI 90 (30-‐day month) U.S. Cheddar Exports(30-‐day month, in million lbs.)

Mozzarella Production & Fresh Cheese Exports


250

260

270

280

290

300

310

320

330

340

JAN

FEB

MAR APR

MAY JUN

JUL

AUG

SEP

OCT

NOV

DEC

2012 2013 2014

WPI 90 (30-‐day month) Mozzarella(30-‐day month, in million lbs.)

0

5

10

15

20

25

30

35

JAN

FEB

MAR APR

MAY JUN

JUL

AUG

SEP

OCT

NOV

DEC

2012 2013 2014

U.S. Fresh Cheese Exports(30-‐day month, in million lbs.)

The Power of Pizza South Korea Indonesia

Saudi Arabia Shanghai, China Copyright Daily Dairy Report, Inc. 34

NDM Production and Stocks


100120140160180200220240

JAN APR JUL OCT

2012 2013 2014

U.S. NDM/SMP Production(30-‐daymonth, in million lbs.)

050100150200250300

JAN APR JUL OCT

2012 2013 2014

U.S. Manufacturers' Stocks of NDM(in million lbs.)

NDM/SMP Exports


0

50

100

150

JAN APR JUL OCT

2012 2013 2014

U.S. Exports NDM/SMPWPI 90 (30-‐day month) U.S. NDM/SMPExportsWPI 90 (30-‐day month) U.S. NDM/SMP Exports(30-‐day month, in million lbs.)

020406080100120140

JAN APR JUL OCT

2012 2013 2014

WPI 90 (30-‐day month) NZ SMP Exports(30-‐day month, in million lbs.)WPI 90 (30-‐day month) NZ SMP Exports(30-‐day month, in million lbs.)

What about Russia?


0

50

100

150

200

JAN APR JUL OCT

2012 2013 2014

WPI 90 (30-‐day month) EU Cheese ExportsWPI 90 (30-‐day month) EU Cheese Exports30-‐day month, in million lbs.)

Reality Check o  The U.S. is a player in the global dairy market o  This brings opportuniPes as well as challenges o  The real quesPon is whether we want to play

J.V., Varsity or Professional.


!!whatdoes!being!aglobal!player! mean!to!the!u.s.!dairy!sector?!! plus... · 2014. 12. 8. ·...

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