The largest U.S. customer for cheese is clearly Mexico. Mexico's demand for cheese has risen at a steady rate through 2008 - almost no volatility. The only significant decline was Egypt and the volumes were small. There is no really big volatility in export volumes. In the first two months of 2009, cheese exports were higher than any year except 2008.
The country by county statistics on cheese imports are shown below in two graphs. The first chart shows the major export countries and the second chart shows only those that had dramatic changes.
Imports from the European countries remained relatively stable. The imports from the European countries are primarily "specialty" cheeses with type or brand identification, not easily subject to substitution.
However when we look at the major non-European country's cheese imports, the volatility comes into focus. These represent primarily "commodity" cheeses which are easily subject to substitution.
New Zealand is in a class by its self. The change in New Zealand imports is huge and dramatic. Argentina and Australia also saw a major changes in volume and the combined impact of all three shown in this chart has a major impact on demand for U.S. produced cheese.
What can be concluded?
- In the April 7 post, the correlation between Class III milk pricing and cheese prices was established.
- In the April 13 post, volatility in demand for U.S. Cheese was linked to changes in export/import volumes, not U.S. consumer demand. The volatility in export/import volumes was linked to changes in exchange rates for the U.S. dollar.
- In this post the export/import swings were identified to be primarily influenced by import fluctuations. The "drill down" of imports country by country showed that imports of "commodity" cheeses from New Zealand, Argentina and Australia create the import volatility.
What does the future look like considering the above?
The longer term outlook will be discussed in a future post to this blog.
Your comments are appreciated.