DairyBusiness Update for Feb. 12, 2013

CWT assists with 2.9 million lbs. of cheese and butter export sales

Cooperatives Working Together (CWT) accepted 18 requests for export assistance from Bongards Creameries, Dairy Farmers of America, Northwest Dairy Association (Darigold), Maryland & Virginia Milk Producers Cooperative Association, United Dairymen of Arizona and Upstate Niagara/O-AT-KA to sell 2.344 million lbs. of cheddar and Monterey Jack cheese and 524,700 lbs. of butter to customers in Asia, the Middle East, and North Africa. The product will be delivered February through July 2013.

So far in 2013, CWT has assisted member cooperatives in selling 21.656 million lbs. of cheese, 10.285 million lbs. of butter and 88,185 lbs. of whole milk powder to 24 countries on six continents. These sales are the equivalent of 424 million lbs. of milk on a milkfat basis, or the milk equivalent of annual production of 20,100 cows.

 

December, annual dairy trade recap

The value of U.S. dairy product exports improved in December, again topping $400 million for the month. At $418 million, exports were up 4% from November 2012, but about 3% less than December 2011. Total 2012 exports were valued at $5.219 billion, up 7% from 2011 and a new record high.

At $318 million, the value of December 2012 imports was up 6% from November 2012 and 16% from December 2011. Total 2012 imports were estimated at $3.18 billion, up 8% from 2011.

The 2012 dairy trade surplus was $2.038 billion, compared to $1.942 billion a year earlier.

At $135 million, December cheese imports were up 4% from November 2012 and up 36% from December 2011. Total 2012 cheese imports were estimated at $1.093 billion, up 2% from the year before.

 

‘Total solids’ balance weakens

U.S. December 2012 dairy product exports were equivalent to 11.6% of U.S. milk solids production, the lowest figure since March 2010, according to figures from the NAtional Milk Producers Federation and U.S. dairy Export Council (USDEC). In the previous 31 months, exports represented 13.5% of U.S. milk solids production. Meanwhile, imports as a percent of milk solids production were 4.0% in December 2012.

 

2012 a record year, but second half was weaker

U.S. dairy exports reached record levels in 2012, but gains were muted by a slowdown in the second half of the year, according to USDEC.

U.S. dairy exports in December were down 23% by volume and 16% by value since the peak levels achieved in May. Still, cheese, whey protein concentrate (WPC), and nonfat dry milk/skim milk powder (NDM/SMP) posted record levels in 2012. Dry whey exports declined for the second straight year, falling 13% from 2011 levels, reflecting that many buyers “traded up” from dry whey to WPC.

Cheese exports in 2012 were a record high 260,033 tons, up 16% from 2011. WPC shipments also reached a new high of 233,362 tons, up 27%.

Overseas sales of dairy products were up 3% by aggregate volume and 8% by value vs. the prior year. However, volume and value were 9%-10% lower in the second of the year than the first. U.S. volume declines and lost share coincided with U.S. benchmark commodity prices moving above comparable to Oceania prices last summer, when drought fears moved U.S. prices up.

The mid-year split played out most dramatically in milk powder. NDM/SMP exports in the first half of the year were up 11% vs. 2011, but were down 6% in the second half. December shipments at 32,454 tons, were equivalent to 37% of U.S. NDM/SMP production during the month, the lowest figure since April 2010, and below the rate of exports needed to prevent inventories from accumulating.

2012 U.S. dairy cattle exports down

Monthly 2012 U.S. female dairy cattle exports were not as consistent as 2011, but annual totals were still the second highest on record, according to USDA’s Foreign Ag Service.

At 2,288 head, December exports fell below 3,000 head for the fourth time in 2012, but only the eighth time in the past three years. The 2012 total was 43,324 head, down from 2011’s record-setting 73,639 head.

Russia was the leading destination for U.S. female dairy cattle in 2012, at 17,913 head. Turkey was second, at 13,250 head. Rounding out the top six importers were Canada (3,615); Angola (2,928); Kazakhstan (2,762); and Mexico (2,237). 

 

2012 U.S. alfalfa exports set new record

December U.S. alfalfa exports surged to the year’s high – and quite possibly the highest monthly total ever – pushing 2012 alfalfa hay exports to a new record, according to USDA’s Foreign Ag Service. 

December 2012 exports of alfalfa hay totaled 171,522 metric tons, bringing the 2012 total to 1.759 million metric tons, about 10% more than 2011. U.S. annual alfalfa exports have now grown more than 1 million metric tons compared to 2007.

The United Arab Emirates was the top alfalfa importer in 2012, at about 597,000 metric tons. Japan was second, with about 450,000 metric tons, followed by China, with about 360,000 metric tons. Rounding out the top six markets were South Korea, Taiwan and Canada.

 U.S. exports of other hay totaled 176,212 metric tons in December, bringing the 2012 total to 1.942 million metric tons, also likely a record high. Japan, South Korea and UAE were the top three markets.

 

MARKETS: Cheese higher; 2013 Class III futures mostly slightly higher from Monday

Today's market closing prices:

Butter: unchanged at $1.5550/lb.

Cheddar blocks: up 1.0¢, to $1.66/lb.

Cheddar barrels: up 2.0¢, to $1.58/lb.

Grade A nonfat dry milk: down 0.75¢, to $1.5125/lb.

Extra Grade nonfat dry milk: unchanged at $1.56/lb.

Class III milk: -13¢ to +1¢ through December 2013. Based on current CME closing prices, the 2012 average is $17.44/cwt.; the 2013 average is $18.10/cwt.; and the 2014 average is $16.41/cwt.

 

Corn, soybean and meal futures lower near-term 

Corn: -6¢ to +4¢ per bushel through December 2013. The 2013 average is $6.44/bu.

Soybeans: -11¢ to +7¢ per bushel through November 2013. The 2013 average is $13.64/bu.

Soybean meal: -$2.70 to +$4.50/ton through December 2013. The 2013 average is $385.07/ton.

 

Ethanol output slows, but pace may pick up

USDA projects that 4.5 billion bushels of corn will be processed into ethanol and by-products during the current marketing year, unchanged from the January projection and 10.2% less than processed during the previous year, according to Darrel Good, University of Illinois ag economist. During the first five months of the 2012-2013 corn marketing year, ethanol production was about 12% less than during the same period last year. Production during the four weeks ended Feb. 1, however, was 16.5% less than during the same period last year. Production during the final 7 months of the marketing year needs to be only about 8.5% less than during the same period last year to reach the USDA projection of corn use. Favorable blending margins, prospects for a slowdown in imports of Brazilian ethanol, and some improvement in ethanol production margins suggest that the pace of ethanol production will increase enough to at least reach the USDA projection of corn use.