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USDEC: Despite second-half weakness, signs positive for U.S. dairy exports

Weakness in the second half of 2013 should not diminish the overall outlook and focus of U.S. dairy product exporters, according to leaders of the U.S. Dairy Export Council (USDEC).
The second half of 2012 illustrated a marked difference from the first. U.S. export volumes grew nearly 8% January-June, compared to the same period the previous year, but declined 2% July-December. And aggregate U.S. export volume in the second half was 9% lower than shipments in the first half.
“Our export softness in the second half primarily stems from unfavorable pricing shifts,” said Tom Suber, USDEC president.
In the first half of 2012, near-perfect weather and strong returns for dairy farmers in major export regions triggered record milk production, pushing global prices about 20% lower, on average, than the previous year. When the U.S. drought hit, domestic supply concerns sent U.S. prices, which had been tracking closely with Oceania, sharply higher.
“The underlying fundamentals behind rising global dairy consumption remain, but a cyclical price rise in the United States reined in U.S. supplier growth in the second half,” said Suber. “The fact that U.S. exports did not plummet, as they did following the 2008 financial crisis, supports the contention that U.S. suppliers are maturing in their approach to the export market. The overall U.S. performance reflects a greater industry-wide move towards exports as a strategic growth path.”
For the second straight year, the United States shipped more than 13% of its annual U.S. milk solids overseas – a continued sign that U.S. dairy suppliers are building a more major role in meeting the needs of burgeoning global dairy demand. The strong year continues a long-term trend, said Paul Rovey, a dairy producer from Arizona and chairman of USDEC.
“Since 2003, U.S. milk production has increased 18% and more than half (56%) of the incremental milk volume has been sold overseas,” Rovey said. “USDEC’s long-term engagement in overseas markets has helped make that possible.”