Exports and Imports through June 2019

Dairy export and import data was analyzed for the first three months of 2019 in the May 22, 2019 post to this blog.  Data for the first six months of 2019 is now available and is reviewed in this post.  As in the first quarter post, only cheese and butter will be analyzed as they have the most impact on producer milk prices.

Changes from the first quarter analysis are minimal except in the details.  Exports of cheese remain near the same level, and exports of butter remain minimal.  The growth of imported butter from Ireland continues to grow and has reached 50 percent of total butter imports.  Another 20 percent of butter imports come from Mexico making a total of 70 percent of butter imports coming from Ireland and Mexico.

CHEESE

Year by year comparative exports of cheese are shown in Chart I.  As shown by the blue line in the chart below, higher levels of cheese exports were achieved in the first quarter of 2019, but in the second quarter, cheese exports fell behind the prior two years.  Compared YTD, for the first half of 2019, cheese exports are up 4 percent over the prior year, based primarily on the strong exports in the first quarter of 2019.

Chart I - Imports of Cheese by Year

Chart II and Table I show where the cheese exports are going.  Combined, the four export markets shown below account for 62 percent of cheese exports.  Exports of cheese to Mexico are down as a result of the tariffs imposed during U.S. and Mexico negotiations.  Those tariffs have now been lifted and exports of cheese should rise in the second half of 2019.

In 2019, the reduced exports to Mexico have been largely offset by increased exports to South Korea and Japan.  Hopefully, these increases to South Korea and Japan can be maintained as exports to Mexico increase.  That would provide a nice increase in total cheese exports

Chart II - Top U.S. Cheese Export Markets

Table I - Top U.S. Cheese Export Markets

Cheese imports remain very low, as shown by the blue line in Chart III. May and June of 2019 are at four-year lows.  When U.S. cheese is so "cheap," why should any cheese except specialties be imported?

Chart III - Cheese Imports by Year

BUTTER

Butter net exports remain negative as shown in Chart IV.  Recent months are showing extreme increases in negative exports.  Negative net exports simply mean that more butter is being imported than exported.

Chart IV - Butter Net Exports

These imports of butter are heavily influenced by imports of "Irish" butter such as "Kerrygold."  Chart V and Table II below show where U.S. butter imports are coming from.  Butter imports from Ireland have grown by over 500 percent in the last five years.  Irish butter has clearly found a strong market in the U.S.  There are almost no competitors to the cultured Irish butter.  A more in-depth analysis of butter imports and Irish butter, based on first quarter import data, were covered in the May 28. 2019 post,

Butter Imports from Ireland and Mexico make up 70 percent of the butter imports.  Butter imports from other countries are small and inconsistent.

Chart V - Butter Imports from Major Suppliers

Table II - Butter Imports from Major Suppliers

SUMMARY

There is very little change in cheese and butter exports and imports.  Increased cheese exports are still needed to reduce the bloated cheese inventories. (See the August 5, 2019 post to this blog for a review of cheese production and inventories.)  With the tariff removed from U.S. cheese exported to Mexico, cheese exports should improve.

Butter is still plagued with imports filling the gap between supply and demand.  Domestic butter consumption is a growth area, but the increasing butter imports are getting much of that growth.