Global Production Slowing Down
The U.S. Dairy Export Council (USDEC) released its monthly data dashboard showing activity in global markets. This month’s report signals ongoing trends that impact dairy markets around the globe. Here are a few important points:
- Global production is slowing down. From October 2016 through November 2017, production on a global scale increased among the top four global suppliers (EU, U.S., New Zealand and Australia), led mostly by production increases in the EU. The peak occurred in November 2017, when production increased nearly 4.5% over the previous year. While production continues to grow, January 2018 was the second consecutive month that production increases were lower than the previous month, dropping to just under 1.9% growth. That was due in large part to a production drop off in New Zealand because of the impact of dry weather on pastures.
- Inventories are still full. Even though production may be slowing down, space isn't opening up in product storage. USDEC data shows powder supplies have increased since October 2017, and butter stocks have increased since last November. Cheese is the only product category that appears to be flat or declining slightly over the past six months.
- U.S. product prices are competitive. The USDEC data also shows that U.S. prices of powder, cheese and butter is the lowest among major competitors.
As global markets evolve the U.S. continues to see increases in export volumes, if not value. For example, in January U.S. exports were ahead of year-ago volume levels by 9%, but the value was up only 1% due to depressed global dairy prices.
Click here to view the complete dashboard.