export ship
February 24, 2017

Cautious Optimism for 2017 Export Markets

 |  By: Anna-Lisa Laca

Despite industry challenges including strong competitors and unfavorable exchange rates, exports soared through the second half of 2016. In fact, the US Dairy Export Council says the second half of last year posted one of the “best second halves” in history.

According to the industry group, the volume of major products grew 15% over the last six months, compared to the final half of 2015. “The 996,000 tons exported from July-December was second only to 1 million tons shipped in the second half of 2013—the current peak year for U.S. dairy exports,” USDEC says.

Among the stars of 2016 are cheese, nonfat dry milk powder, whole milk powder and whey, which was by far the best performer. Total U.S. whey shipments grew 33% from July-December, driven by record shipments to China, USDEC reports. During the same time frame, whey enjoyed a price advantage over the EU. Similarly USDEC reports cheese and butter prices becoming more competitive last fall.

Will the U.S. export market remain strong throughout 2017? Possibly. “Prospects for continued U.S. export volume gains are mostly positive,” USDEC reports. “U.S. pricing is better aligned with the world market, and the United States remains the only major supplier with excess product to sell.”

However, caution is advised. Following last year’s price run-up, global markets are in a lull USDEC says.

"Buying interest has waned, particularly from more price-sensitive importers,” they says. “Heavy EU stockpiles of SMP (352,000 tons in Intervention, equivalent to 1.5% of annual EU milk production) are casting a long shadow on the market.”

In addition, the strong U.S. dollar and soft oil prices are depressing purchasing power around the world.