By Carol Ryan Dumas
Dairy exports in the first half of the year totaled a record-high $3.17 billion, up 16 percent from $2.74 billion in the first half of 2012, pushed by increasing global demand.
Export volume was up 9 percent over the same period in 2012, but the increase in export value was also due to higher prices, said Alan Levitt, vice president of communications for U.S. Dairy Export Council.
Exports by value have been up every month in the first half of the year compared with 2012, and exports by volume were only lower in March and only by maybe 1 percent, he said.
U.S. dairy exports have been up across the board this year, with cheese, skim milk powder and whey protein at record highs. Butterfat has been up as well, although not at record levels.
There's a combination of factors boosting U.S. dairy exports, but the main reason is that global demand has been solid while there's been a decline in production in most of the other exporting regions, he said.
The U.S. is the only region that has been increasing production and pricing has been favorable, which created opportunity for U.S. exports, he said.
While New Zealand's exports of milk powder, cheese, butterfat and whey were up 4 percent in the first half of the year, they were down 7 percent in the second quarter. Exports of those products were also down 11 percent for Argentina for the first half of 2013 and down 9 percent for the EU and 10 percent for Australia from January through May.
Strong U.S. exports are also a factor of increased commitment and market presence by U.S. manufacturers, making them better able to capitalize on opportunities when conditions are favorable, Levitt said.
Exports are important to the U.S. industry to keep markets and prices strong here at home. The U.S. needs to export 45 percent of its powder and 4 percent to 5 percent of its cheese to clear domestic markets and keep product from backing up, he said.
In the first half of the year, powder exports were about 50 percent of U.S. production and cheese exports were almost 6 percent, he said.
Levitt said he expects exports to be equally bullish in the second half of the year because the same conditions still apply -- global production is still sluggish, and there's no indication demand will suffer.
In addition, world markets are considerably stronger today than they were at this time a year ago, which bodes well for the second-half outlook. Currently milk powder is 60 percent to 70 percent higher, cheese is 20 percent to 30 percent higher and butter is 30 percent to 40 percent higher, he said.
"Conditions are still favorable for us. All indications are that the market is firm. Prices are stable, and no one's expecting a drop. We should be able to continue doing what we're doing," he said.
If the U.S. has product to sell, it's going to be in a pretty good position, he said.
The upcoming milk flush in Oceania will be the biggest factor, but there's still a bit of a residual effect from the drought in New Zealand last spring, he said.
Production there is expected to be flat, but if it's better than expected, it'll pressure prices downward. If it's worse than expected, it'll cause a panic and pressure prices upward, he said.