The highlights are as follows: All comparisons are 2019 vs. 2018.
- Cheese exports are up by three percent.
- Cheese imports are up by one percent.
- Therefore, cheese net exports are up by five percent.
- Butter exports are down by 46 percent!
- Butter imports are up by 10% percent.
- Butter net exports (really net imports) more than doubled on weak exports and strong imports of butter. The U.S. imports twice as much butter it exports.
CHEESE EXPORTS
Cheese exports showed growth in 2019 in spite of a difficult environment as trade negotiations with Mexico, Canada, and China resulted in significant changes in tariffs. The largest percent increase over the prior year came in the first quarter before trade negotiations "heated up." The last three quarters produced almost no gain (Chart I).
Table I below shows the details of the full year changes in exports.
Cheese exports showed growth in 2019 in spite of a difficult environment as trade negotiations with Mexico, Canada, and China resulted in significant changes in tariffs. The largest percent increase over the prior year came in the first quarter before trade negotiations "heated up." The last three quarters produced almost no gain (Chart I).
Chart I - Cheese Exports YTD for 2018 and 2019 |
Mexico is by far the largest importer of U.S. cheese. For 2109, these exports were down by 1.2 percent. The largest volume and percent decline in exports came from China with a 54.3 percent drop in volume.
However, there were two amazing offsets to the "trade war" impact. First of all, there were significant gains in cheese exports to South Korea and Japan. Secondly, there were very nice gains from the 106 countries that are smaller customers. Those smaller export markets make up only 20 percent of the total export volume but contributed a 9.3 percent gain over the prior year.
Table I - Cheese Exports by Country |
Chart II - Cheese Imports YTD for 2018 and 2019 |
Chart III - Cheese Imports by Country |
Chart IV - Cheese import YTD for 2018 and 2019 |
BUTTER
Butter exports took a plunge in 2019, down 44 percent from the prior year as shown in Chart V. That is a huge drop! The first quarter had a very small decrease and the remainder of the year had decreases of over 50 percent compared to the prior year.
Chart V - Butter Exports for 2018 and 2019 |
Chart VI - 2018 and 2019 Butter Export by Country |
Chart VII - Butter Imports for 2018 and 2019 |
Chart VIII - Butter Imports by Country |
Chart IX shows the growth of Irish butter in the last five years.
Butter consumption in the U.S. is growing at around 2.5 percent annually and Irish butter imports are grew at 25 percent in 2019. At this time, the growth of total imports of butter satisfy about one third of that growth. That leaves only two thirds of the consumption growth for U.S. produced butter.
Chart IX - Growth of Irish Butter Imports |
SUMMARY
Exports can drive demand for U.S. dairy products. With declining domestic consumption of fluid milk, yogurt, and ice cream, increased exports of dairy products are desperately needed. There have been significant improvements in trade agreements in 2019 and there is hope for more new trade agreements in 2020.
Also driving exports is price competitiveness in the global markets. There are two things that can make U.S. dairy products financially attractive in the international markets. Exchange rates are an important factor in exports, but there is little that can be done within the dairy industry to manage exchange rates. But, being a low-cost provider is extremely important and can be managed by producers and processors. The year of 2019 has been very harsh on less productive producers. That said, the harsh realities of the capitalistic system are the key to survival.
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