Sunday, August 13, 2017

Great H1 for exports, however, June cheese and NDM exports are down

Dairy exports showed some weakness in June, but from a broader perspective the first half of 2107 was up considerably over the prior year.  Butter exports were up 35.9% from May, but it was on a very small base.  With the domestic shortages and tight inventories, it would be difficult to export any significant amount of butter.  Exports of cheese, nonfat dry milk (NDM), and dry whey were all down versus the prior month.
Chart I - Export Changes from Prior Month
As mentioned in the July 9 post to this blog, long-term increases do not typically occur with increases each month.  Long-term increases always have ups and downs.  The upward trend for cheese exports started in October 2016 and has continued to grow reaching a near record level in May 2017.  If there is another downturn in August, that could be concerning, but the one month decrease is normal for an improving market.  There are now nine months of data supporting an upward trend in cheese exports.

Chart II - Monthly Exports of Cheese
Cheese exports for the first half of 2017 were close to the second best ever.  Cheese exports are the most important parameter for insuring that there is a sufficient market for the cheese being produced. Without a sufficient market, inventories will increase and prices will fall.  With lower cheese prices, Class III milk prices will also fall as well as the uniform milk price.

Chart III - Cheese Exports for January through June
NDM exports are the backbone of U.S. dairy exports.  It is by far the largest export category and the U.S. is the world leader in NDM exports (see prior post).  June exports fell significantly.  As with cheese, one month of data, although troubling, does not define a long-term problem.

Chart IV - Monthly Exports of NDM
For the first half of 2017, exports of NDM were about even with the record year of 2014.  Unfortunately, prices were much lower than 2014, but the volume has helped in keeping demand for dairy products closer to supply.

Chart V - NDM Exports for January through June

Exchange rates are continuing to show a weaker USD, which will help increase exports by making U.S. products less expensive in the international market.

 When the chart charts below show an increase, the USD is weaker and U.S. export products are more competitive.  The two largest export competitors in the international markets are Europe and New Zealand.  (More detail is available in the July 28 post.)  In the two charts below, there is a trend toward a weaker USD and a stronger Euro and NZD.

Chart VI - Exchange rates for the USD vs. the Euro
Chart VII - Exchange Rates for the USD vs. the NZD
Mexico is by far the largest export market for U.S. Dairy products.  The Mexican Peso is gaining strength against the USD,  which in turn is making U.S. dairy products more financially attractive in Mexico.  This is another very positive sign for U.S. dairy exports.

Chart VIII - Exchange Rates for the USD vs. the Mexican Peso
Exports to Canada are not typically significant as Canada is not a NAFTA open border for dairy products.  However there has been a great deal of press concerning a possible renegotiation of NAFTA.   It seems unlikely that Canada will open their market for dairy imports.  However, if this did happen it could have a very strong and positive impact on U.S. dairy exports.  The exchange rate of the USD/CAD could be very important and it is currently showing a weaker USD and a stronger CAD.

Chart IX - Exchange rates for the USD vs. the CAD
While June exports has some disappointing analytics, the longer-term view shows very positive trends.  The data for July, which will be ready in a few weeks, should tell a lot.

Sunday, August 6, 2017

Milk Protein hits 16 year low, Butterfat Prices Near Record

July Class and Component milk prices were announced on August 2.  The class III milk was down $1/cwt. to $15.42.  Milk protein hit a 16 year low and butterfat is at near record highs.

Chart I - Price Movements for July vs. the Prior Month
As shown in Chart II below, the price of milk protein has not been this low since the start of 2001.  The value of milk protein for July is $1.22/lb.  This compares to record highs for milk protein at nearly $5.00/lb.  Butterfat in July was worth $2.95/lb., near the all-time records which are just above $3.00/lb.
Chart II - Long-term Trends
With these abnormal prices, July's butterfat contribution to the milk check jumped to 67%.  July is a record setting month, but only because of the extremes in pricing.

Chart III - Pie Chart of Class III price
What caused these extremes?  Cheese prices were down only 5.3% in July, but protein prices went down 30.2%.  Frankly, it's surprising that cheese prices went down at all.  Exports of cheese are improving (see July 9 post) and inventories are declining (Chart V below).  Typically, this scenario causes an increase in cheese prices.  For that reason, the 5.3% dip should be taken as a normal fluctuation, not a trend.  

The real reason for the big dip in protein prices is the increase in butter prices.  When butter prices go up, the value of butterfat goes up, and the value of milk protein goes down.  There are many published articles stating how much money producers are making from the increase in butter prices.  However, butter prices do not drive higher milk checks.  The Class III hardly changes when butter increases in value.

The formulas behind this are shown below.  The price of butter influences both the formulas for butterfat and milk protein.

Butterfat Price = (Butter Price − 0.1715) x 1.211) 

Protein Price = ((Cheese Price − 0.2003) x 1.383) + ((((Cheese Price − 0.2003) x 1.572) − Butterfat Price x 0.9) x 1.17)

If one collapsed the protein price formula, to its simplest terms it would be as follows:

Protein Price = Cheese Price x 3.22 - Butter Price x 1.28 - $.42

In July, the cheese price was $1.54/lb. and the butter price was $2.60/lb.  Because the butter price has a negative influence in the formula, it significantly drove down the value of milk protein.

The chart below shows the cheese and butter prices since the beginning of 2000.  There have been a few times in the past when butter was worth more than cheese, but they were short-term spikes. However, starting in 2015, butter prices shot up.   During that same period, cheese prices have been moderately low.  In July, this reached an extreme point with very high butter prices and very low cheese prices.

Chart IV - Cheese and Butter Prices
A high butter price moves the money from protein to butterfat, but has a small impact on the overall milk check.  (See more detail on this relationship in a prior post.)

July's pricing was an extraordinarily unusual event and extraordinarily unusual events don't typically last. It would not be wise to make long-term decisions based on Pie Chart III above.   Retail prices for butter are very high, and high retail butter prices will reduce domestic consumption as some consumers change to lower priced vegetable spreads.  With reduced consumption, inventories will grow and domestic prices will fall.  The future's market is indicating a 10% increase in cheese prices by the end of 2017, and a 10% decline in butter prices. This would bring the milk protein price back to $2.00/lb. from the current $1.22/lb. price.

The moderately low cheese prices result from excess inventories and the excess inventories are caused by lagging export volumes of cheese.  However, as covered in a prior post, cheese exports are growing quickly and inventories are starting to fall.

Chart V - U.S. Cheese Inventories
Cheese exports for June will be covered in the next blog, but the data available indicates that cheese exports are continuing to grow at a rapid rate.

July component pricing was abnormal.  But all indicators show that more normal pricing will quickly return.

Monday, July 24, 2017

Insights into the Export Market

The international market for U.S. dairy is extremely important.  The swings can be significant and the markets can be changed overnight by political events and exchange rates, but the international market does offer strong demand for the excellent dairy products that the U.S. can produce.  This post will provide an overview of the international market through the analytics of the big three exporters, the EU28, the U.S., and New Zealand.  These three represent about two-thirds of the global milk production. The data used in this post is based on 2016 production and international markets.

Chart I shows milk production from the three biggest global milk producers that dominate the international market.  While New Zealand's milk production looks small compared to the EU28 and the U.S., they export around 95% of their milk and are a very key international exporter.

Chart I - Milk Production
Europe has been active in dairy for centuries and continues to dominate the global dairy category. The EU represents 28 different countries, but in economic terms they are viewed as one, with a common currency, the Euro.

The U.S. has a smaller population and a smaller milk supply than the EU28.  The population of the U.S is 323 million while the population of the EU28 is 510 million.  The ratio of population to milk production are nearly identical.

By contrast, the population of New Zealand is shy of 5 million.  So the typical question is how and why should New Zealand has such a significant milk production.  The answer is in exports.

Depending on the year, the EU28 and the U.S. export 14 to 15% of their dairy production.  New Zealand exports nearly 95% of its milk production.

There are three dairy products that make up about two-thirds of the dairy products traded in the international markets.  They are cheese, nonfat dry milk (NDM)/skimmed milk powder (SMP) and whole milk powder (WMP). (See this prior post for the definitions and difference between NDM and SMP.)

Cheese exports are dominated by Europe with 55% of the volume.  European cheeses are prevalent around the world.  Some are specialty cheeses and some are commodity cheeses.  Their exports are well recognized and carry strong brand names.  Perhaps surprisingly, New Zealand holds second place with 25% of cheese exports.  Their processing and marketing arm, Fonterra, had done an excellent job in developing brands and promoting cheese sales in Asia and the Pacific rim.

Chart II - Cheese Exports
There is obviously a great opportunity for the U.S. to develop additional cheese exports globally.  The U.S. in 2016 exported only 2.5% of their milk production in cheese.  The EU28 exported 4.5% of their milk production in cheese and New Zealand exported 14.3% of their milk production in cheese.

The U.S. is the leader in exports NDM/SMP as shown in Chart III.  U.S. NDM/SMP exports has doubled in the last seven years.  A doubling in 7 years requires a compounded growth rate of 10% annually.  Exports of U.S. NDM/SMP are on track to hit another major high in 2017.  Part of this growth is driven by the need for additional butterfat as U.S. domestic consumption of butter grows. Also, production and export of NDM/SMP is forecast by AMS for major growth in 2018 if California becomes a Federal Milk Marketing Order.   It appears that the U.S. will continue rapid growth in this category.

Chart III - NDM/SMP Exports
Finally comes a category rarely discussed in the U.S., whole milk powder (WMP).  This category is dominated by New Zealand as shown in Chart IV.  Of the 21 million metric tons of milk produced in New Zealand in 2016, nearly half went to the production of WMP.  About 30% of that WMP volume went to China.

Chart IV - WMP Exports
There is no domestic market for WMP in the U.S., so producers are skeptical about producing a product that only has an export market.  There has been growth in WMP production in the U.S., but it is still minuscule compared to NDM/SMP.

Chart V - U.S. Production of WMP
What can be concluded from this brief view of the international dairy market?

Growth in exports of cheese would greatly benefit U.S. dairy producers.  More exports make increased demand and increased demand reduces inventories, and lower inventories make for higher prices.  There is a 96% correlation between the price of cheese and the price of Class III milk, so with higher cheeses prices, producer milk prices will increase.  This presents a significant opportunity for U.S. producers, processors, and exporters.  There is room to grow this market as is demonstrated by the volume of milk exported by the EU28 and New Zealand.

The growth of WMP is more difficult.  Because of the butterfat in WMP, it must be protected from the air.  In the presence of air, the butter will oxidize and become rancid.  The traditional approach is to keep WMP fresh is to seal it in an oxygen proof barrier like a can and nitrogen flush the "air space" to eliminate the oxygen.  Few companies are willing to commit to the equipment and packaging that is necessary to compete in this arena.

The "bottom line" of this whole post, is that emphasis needs to be placed on further expansion of U.S. cheese exports.   The U.S. has not taken its share of this market.  Cheese is a significant growth market for U.S. consumption which reduces the risk of expansion.  Exports of cheese are already increasing as analyzed in the prior post, and continued export momentum is key to the economics of the U.S. dairy industry.

Sunday, July 9, 2017

Exports of Cheese Skyrocket!

Export and import data for dairy products was updated through May 2017, this past week.  Export increases were far above expectations.  The most needed increase was for cheese exports.  U.S. cheese inventories are high and as a result, prices have been low (see prior post).  In May, cheese exports increased by 26.9% vs. the prior month.  The volume of cheese exported was the second highest ever.  Currently U.S. cheese is the lowest priced cheese in the international markets.  This will clearly have a major impact on reducing the U.S. cheese inventories.   With lower domestic inventories, cheese prices should recover and with that, Class III milk prices will recover.

Chart I - Dashboard of Dairy Exports used to Calculate Producer Milk Prices
Chart II below shows the volume of cheese exports since the year 2000.  May's export volume of cheese was the second highest ever and just short of a record!  It was not just a nice increase over the prior month, or a big percentage on a small base, or an unusual month.  It was a continuation of the trend started at the beginning of 2017.  The May exports accounted for 7.4% of U.S. cheese production.

Chart II - Cheese Exports, 2000 to Present
Where did all this cheese go?  Chart III below shows the YTD metric tons of exports.  The biggest gains in exports came from Mexico, South Korea, and Australia.  Japan also has a nice increase.

Chart III - Cheese Exports by Country
How is this happening?  U.S. cheese is now the cheapest cheese on the international market.  It is priced below Oceania and European cheese and below the most recent NASS price of U.S. cheese.

Can this continue?  That's a tough call.  As will be covered later in this post, the USD is still very strong vs. other cheese exporting countries and vs. the major U.S. export customer, Mexico.  So, the question is, was this just a one month bleep or the beginning of a new trend?   As shown in Chart II, there is a trend of gains over the last six months.  If these gains continue, they will certainly not be linear. Gains, as always, do not happen is a straight line.  There are always ups and downs in the path of growth. 

Because this change in cheese exports is so significant, the export/import data is also reviewed below in three charts, which show exports, imports, and net exports on a year by year basis.

Chart IV shows 2017 cheese exports relative to the prior four years.  May 2017 was an all-time record for this month.  It is only slightly below the all-time record month of March 2014.  

Chart IV - Cheese Exports
Imports of cheese have been flat for the last three months.  While there has been no decrease in imports, there have been no significant increase.  Cheese imports are currently running at the level of the prior two years.

Chart V - Cheese Imports
As a result, cheese net exports were near a record level for May.

Chart VI - Cheese Net Exports (Exports-Imports)
Nonfat Dry Milk (NDM) set an all-time export record in May.  The exports represented 59% of NDM production for May.  NDM is by far the largest U.S. dairy export product. 

Chart VII - NDM Exports
Where did all this NDM go?  The vast majority of this went to Mexico, with a mixture of other countries making up the balance.

Chart VIII - NDM Exports by Country
The U.S. struggles for enough butterfat to meet the domestic demand for butter.  As a result, an increasing amount of NDM is available.  Prices are not great, but the international markets do present a selling opportunity.

Exchange rates were covered in detail in last month's post.  The good news reviewed at that time continues in June.  The USD has again weakened against the three major currencies important to U.S. dairy exports.

The USD/Euro showed continued progress as the ratio is currently at 1.14.  At the beginning of 2017 the ratio was 1.08 and last month it was at 1.12.  As the USD weakens against other currencies, competitive pricing and exports will benefit.  The EU is the biggest dairy exporter and a strong competitor especially in the NDM and Skimmed Milk Powder market.

The second biggest dairy exporter is New Zealand.  In the prior months analysis of exchange rates, the USD was continuing to strengthen against the NZD.  At the current time, there has been a major turn around and the NZD is now strengthening against the USD.

The biggest customer for U.S. dairy products is Mexico.  After a three-year decline, the Mexican Peso is currently strengthening.  This makes U.S. produced dairy products lower priced for Mexican buyers.

In all, the current increase in exports and especially the current increase in cheese exports is extremely encouraging.  The trend to a weaker USD are also very encouraging.  After many months of difficulty with the volume of dairy exports, May was extremely positive and hopefully expresses a change in trends to further increasing dairy exports.

Tuesday, July 4, 2017

June Class and Component Prices Rise

Class III milk and component prices for June were announced on June 28.  Most all prices were up. The biggest increases were for butter and therefore butterfat.  Cheese and NDM prices were also up appreciably.  Dry whey prices which are used calculate the value of Other Solids was down.  Milk protein was down slightly only because butter prices went up in value more than cheese prices.  Milk protein pricing is calculated with the value of two commodities, cheese and butter. When cheese goes up, milk protein goes up and when butter goes up, milk protein goes down.  See this prior post for a more in-depth analysis of this relationship.

Chart I - Dashboard of Price Changes
The big increase in the value of butter created a lopsided split of the component values that make up the Class III price (Chart II).  Butterfat is now accounting for 58% of the Class III milk price when the standardized proportions of components are used.   The Class III price announced is based on rounded component levels of 3% milk protein, 3.5% butterfat, and 5.7% other solids.

Chart II - Pie Chart of Component Values in the Class III Price
While the standardized Class III price is primarily dependent on the price of cheese (see Chart III below), and is minimally impacted by the price of butter (see post on pricing), if additional butterfat can be produced by means such as nutrition, that would be a very valuable move for a milk producer.

Chart III - Correlation Between the NASS price of Cheese and the Class III Milk Price
The remainder of this post will concentrate on the current relative pricing of the commodities used to price producer milk.  The current Class III price is $16.44/cwt.  Chart IV below shows the Class III price since the beginning of the current dairy pricing model in January 2000.  This June price is better than the prior month by 5.6%, but it is significantly lower than the record high price and well above the lowest price.  The current price is a little below the average price of the latest five years.  One could say that the current price is a little on the low side of average milk prices. If a producer's cost is such that there is no profit at the current pricing, they should consider exiting the dairy business.  Feed costs are currently not abnormally high and any hopes of hanging on to make profits with higher priced milk would probably occur only temporarily and sporadically.  Only producers who can operate profitably at current prices can survive over the long-term.

Chart IV - Class III Milk Price - 2000 to June, 2017
In the remainder of this post, prices of the commodities used to price components will be reviewed.  In general, most of these commodities are at a medium price level.

Cheese prices since 2000 are shown in the chart below.  Just like the Class III pricing shown above, the current cheese price is roughly midway between the highs and lows since 2000.  When reviewed over the last five years, the current pricing is well below average.  This should indicate that there is room for improvement in the price of cheese.  The current prices are being held back by the high inventory levels shown in Chart VI.

Chart V - NASS cheese prices, 2000 to June 2017
When excess milk is available, one convenient "parking space" is cheese.  Currently cheese exports are not near prior levels (see prior post) and domestic consumption, although robust, cannot absorb all of the cheese being produced.   Excess inventories always mean lower prices.

Chart VI - Inventories of Cheese
Butter prices are likely to remain well above historical levels for the remainder of 2017.  Whether this is a long-term trend, or a short-term development remains controversial.  Domestic consumption of butter is increasing (see post on consumption rates) and production is down.  While imports are up significantly, inventory levels are still tight (see Chart VIII).  

Chart VII - NASS Butter Prices
With tighter butter inventories come higher prices.  The current butter inventory is below prior year levels.

Chart VIII - Inventories of Butter
The price of Other Solids is based on the NASS value of dry whey.  Because dry whey is an international product, the value is established by international supply and demand.  Dry whey prices, shown in Chart IX below, are above average and as a result Other Solids has reached a comfortable level of $.30/lb.

Chart IX - NASS Dry Whey Price
The price of Nonfat Dry Milk (NDM) is very dependent on the export market.   NDM prices have typically been around $1/lb. or less.  In the last 10 years there have been a number of spikes which have sent NDM milk prices surging.  Currently, NDM carries a NASS price of. $.91/lb.  Like dry whey, NDM is priced based on international supply and demand.  As more milk is skimmed for butter production, more skimmed Class IV milk is available.  The domestic consumer market for skimmed milk is very small.  Therefore the skimmed milk must be dried and sold internationally as NDM or skimmed milk powder (SMP).  There is always a market for NDM/SMP but it is very price dependent.  If domestic butter consumption continues to grow, more NDM will be available for export which may reduce prices further.
Currently NDM is near the historic low point for NDM prices.   NDM is the basis for pricing Class IV skim milk.  There is currently no reason to expect a shortage of NDM which would increase the price of NDM or Class IV milk.

Chart X - Nonfat Dry Milk Prices
When the price of Class IV milk is above the Class III price, it becomes the basis for Class I milk pricing.  Based on the chart below of Class III and IV pricing, there is no history of the Class IV being consistently above the Class III price since 2013.  There is also no known international event that would drive the price of NDM to the highs seen in 2013.

Chart XI - Class III and Class IV Milk Prices
In summary,  cheese and whey prices are at a middle of their historical prices.  Only increased exports of cheese or reduced production will boost cheese prices.  Cheese prices are the most important parameter for Class III milk prices.

Butter prices remain very high.  Butter production is limited and inventories are tight.  Only a decrease in domestic butter consumption or an increase in butter production will lower the price. Neither is likely.  With continued high production of cheese and limited production of butter, butterfat prices will remain high and milk protein prices will remain near current levels.

Dry whey prices will float with the international market and therefore are very speculative.   Therefore, Other Solids pricing will most likely remain near the current levels.  Nonfat dry milk will find a market at low prices and will probably not become a factor in overall dairy prices.

The biggest mover on the horizon is the probable conversion of California to a Federal Milk Marketing Order.  This will likely occur this year, but will not be implemented until early to mid 2018.

Sunday, June 11, 2017

Changes in Exchange Rates Will Help Exports

Exports are improving and exchange rates are shifting favorably.  The Euro is getting stronger and so is the Mexican Peso.  The EU is the world's largest dairy exporter and therefore, the most important exchange rate is the USD/Euro.  Mexico is by far the biggest importer of U.S. dairy products, so this exchange rate is also very important.

A  ten year review of USD/Euro shifts shows the importance of this exchange rate.  From 2008 through the start of 2017, the Euro has gotten consistently weaker vs. the USD.  In mid 2008, the USD/Euro exchange rate was $1.55 per one Euro.  In mid 2014 (an excellent time for milk prices, the exchange rate hovered near $1.40.  At the beginning of 2017, that exchange rate fell to $1.08, a 30% drop from the highs of 2008.  What does that mean?  In 2008, a European exporter of cheese selling cheese for one Euro,  competed evenly against U.S. cheese selling for $1.55.  By the beginning of 2017, the U.S. exporter would have to price his cheese at $1.08 to compete evenly against the same EU cheese exporters in the international market.  A strong USD always sounds good (stronger is better), but when it comes to exports, a stronger USD makes it more difficult to compete in the international markets.

Exchange Rate - USD/Euro

Currently, the exchange rate is $1.12, not a huge improvement, but hopefully a trend to a weaker USD and a better market for U.S. dairy products.

The largest buyer of U.S. dairy products is Mexico.  Unfortunately, from 2008 to early 2017, U.S. dairy products have become more expensive in Mexico due to the exchange rates.   However, during 2017, the Mexican Peso has strengthened vs. the USD, making U.S. dairy products more affordable in Mexico. Dairy sales from the U.S. to Mexico continue to be robust.  A stronger Mexican Peso should support additional purchases.

Exchange Rates - USD/Mexican Peso

However, not all exchange rates moved to the U.S. advantage.  New Zealand is also a very strong international competitor.   Roughly 80% of New Zealand's dairy production is exported.  These exports are especially strong in the Pacific rim, but they are also strongly competitive worldwide. New Zealand dairy exports to the U.S. were up significantly in 2016.  Unfortunately, the USD is continuing to strengthen against the NZD.  As a result, New Zealand is again increasing milk production as exports expand.  Dairy exports are very important to new Zealand's international trade balance.

A ten year review of USD/NZD exchange rates is shown below is a reminder of the importance of fluctuations in the USD/NZD. The chart shows historically the impact of exchange rates in 2008/2010.  In 2008, the USD/NZD ratio showed a strong NZD.  U.S. exports were strong and carried excellent prices. In 2009,  the USD significantly strengthened vs. the NZD, making U.S. dairy exports uncompetitive with New Zealand dairy exports. (See the 2009 post to this blog.)

 Exchange Rate - USD/NZD
Cheese prices, and therefore Class III milk prices, fell by nearly 50% in late 2008 and early 2009. Class III milk prices dropped from $20/cwt. to $10/cwt.  As the USD/NZD exchange rates reversed in 2010 and 2011, cheese prices and Class III milk prices improved.  There is a 96% correlation rate between cheese prices and the Class III milk price.

NASS Cheese Price - 2000 to 2017

Dairy exports to Canada are about half the size of the exports to Mexico, but Canada is still the second largest importer of U.S. dairy products.  Unlike Mexico, the USD is continuing to strengthen vs. the Canadian dollar.  The impact of this on U.S. exports to Canada have been overshadowed recently by the Canadian price controls on ultra-filtered dairy components which have reduced dairy exports to Canada.  At this point, the adverse impact of a stronger USD vs. the CAD is having a minimal impact.

Exchange Rates - USD/CAD

With the two most important exchange rates, the Euro and the Mexican Peso, moving in a positive direction, U.S. dairy exports should continue to make gains in the coming months.  While the shift to a weaker USD vs. the NZD is troubling, the shift to date is minimal and should have a minimal impact on U.S. dairy exports.

Exchange rate data is always very current and immediately available.  Export/import data has a one month plus lag in availability, so the impact of recent moves in exchange rates cannot be correlated time-wise with the export/import data that is reviewed below. International prices of U.S. dairy products are impacted by international supply and demand (too much available product means lower prices), and by exchange rates.  

There are three factors that can influence U.S. dairy prices, domestic supply and demand, international supply and demand, and exchange rates.  Of these three, exchange rates are the most volatile.

Overall, U.S. dairy exports are continuing to improve.  They are still well below the volumes and prices of 2014, but progress is still progress.  Cheese exports so far in 2017 are running well above 2016 levels.

U.S. Cheese Exports

YTD, cheese imports are running below 2016 levels and close to 2015 levels.  Lower imports mean more U.S. cheese is being used domestically.

U.S. Cheese Imports
In total, cheese net exports (export - imports) are well above 2016 levels.  While April numbers show a drop, this is most likely a short-term fluctuation, not a change in trends.

U.S Cheese Net Exports
Mexico is by far the largest importer of U.S. cheese, but the increases are coming from South Korea and Australia.

Cheese Exports by Country

The reduction in imports has mostly occurred from reductions of cheese imports from Italy and New Zealand.  
Cheese Imports by Country

Butter exports remain near zero and imports are down, bringing net exports to a near "0" balance. As reviewed in the prior post, the consumer demand for butter is outstripping production, so imports will likely increase.

Butter Net Exports

Exports of NDM continue at near record levels.  NDM is the largest U.S. export product.  Domestic prices are determined by international prices, which have improved, but are still well below 2014 prices.

NDM Exports

This post has been mostly about exchange rates.  As the world continues to recover from the recession levels of 2008, the U.S. is a clear economic leader.  This has caused the USD to strengthen against other currencies.   Now the challenge is how to continue as a world economic leader, while reducing the strength of the USD.