U.S. Dairy Market Outlook and What it Means to California(WMP) production is exported. Meanwhile,...
Transcript of U.S. Dairy Market Outlook and What it Means to California(WMP) production is exported. Meanwhile,...
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U.S. Dairy Market Outlook and What it Means to
California
Mary Ledman, Dairy Economist [email protected]
847-680-9693
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o U.S. & Regional Milk Produc5on o Global Dairy Update o U.S. Dairy Exports o Dairy Product Produc5on and Stocks o Outlook
Outline
April 25, 2013 Daily Dairy Report, Inc. 2
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U.S. Milk Production
14,000
15,000
16,000
17,000
18,000
Jan Apr Jul Oct
(Mill
ion
Lbs.
)
2011 2012 2013
Chg. vs. Feb. '13 +1.3% Chg. vs. Mar. '12 -0.3% YTD Avg. +0.0%
April 25, 2013 Daily Dairy Report, Inc. 3
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U.S. Milk Per Cow
1,500
1,600
1,700
1,800
1,900
Jan Apr Jul Oct
(Pou
nds)
2011 2012 2013
Chg. vs. Jan. ’13 +1.8% Chg. vs. Feb. ’12 +0.3% YTD Avg. +0.5%
April 25, 2013 Daily Dairy Report, Inc. 4
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U.S. Dairy Herd
9,000
9,100
9,200
9,300
Jan Apr Jul Oct
(1,0
00 h
ead)
2011 2012 2013
Chg. vs. Jan. ’13 +0.0% Chg. vs. Feb. ’12 -0.3% YTD Avg. -0.3%
April 25, 2013 Daily Dairy Report, Inc. 5
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Regional Milk Production
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o Key States: New York, Pennsylvania, Vermont
o 26.3 billion pounds 2012 o More than 40% of milk used
in fluid market o Yogurt focus o Balancing with power plants
Northeast Milk Production
1,900
2,000
2,100
2,200
2,300
Jan Apr Jul Oct
(mill
ion
lbs.
)
2011 2012 2013
Chg. vs. Feb. ’13 +0.9% Chg. vs. Mar. ’12 +1.3% 2013 YTD +1.7%
April 25, 2013 Daily Dairy Report, Inc. 7
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o Key States: Michigan, Minnesota, Wisconsin
o 45.1 billion pounds in 2012 o 85% of milk used in cheese/
whey and butter production o U.S. cheese production 35% o U.S. butter production 25% o New SMP plant in Michigan
May 2012 capacity 4 million pounds of milk per day
Midwest Milk Production
3,300
3,450
3,600
3,750
3,900
Jan Apr Jul Oct
(mill
ion
lbs.
)
2011 2012 2013
Chg. vs. Feb. ’13 +0.3% Chg. vs. Mar. ’12 +2.8% 2013 YTD +3.7%
April 25, 2013 Daily Dairy Report, Inc. 8
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o Represents Arizona, New Mexico, Texas
o 22.3 billion pounds 2012 o More than 35% of milk used
in fluid market o Large manufacturing plants >
4,000 metric tons per day • Southwest Cheese • Hilmar Cheese –Dalhart
Southwest Milk Production
1,500
1,650
1,800
1,950
2,100
Jan Apr Jul Oct
(mill
ion
lbs.
)
2011 2012 2013
Chg. vs. Feb. ’13 +1.2% Chg. vs. Mar. ’12 -3.4% 2013 YTD -1.9%
April 25, 2013 Daily Dairy Report, Inc. 9
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o Key States: California, Idaho, Washington
o 61.6 billion pounds in 2012 o 33% of Total U.S. Production o U.S. SMP/NDM production
75% of and exports more than 50% of its SMP/NDM production
o 50% of U.S. butter production o 30% of U.S. cheese
production
Western Milk Production
4,400
4,650
4,900
5,150
5,400
Jan Apr Jul Oct
(mill
ion
lbs.
)
2011 2012 2013
Chg. vs. Feb. ’13 +2.6% Chg. vs. Mar. ’12 -2.1% 2013 YTD -2.8%
April 25, 2013 Daily Dairy Report, Inc. 10
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o Production down 3.3% vs. March 2013, driven primarily by lower milk per cow.
o Dairy herd 1,782,000 as of February 2013, down 2,000 head vs. last year.
o Potential for significant year-over-year increases in production during 2H of 2013. • Profitability • Weather?
California Milk Production
3,000
3,200
3,400
3,600
3,800
Jan Apr Jul Oct
(mill
ion
lbs.
)
2011 2012 2013
Chg. vs. Feb. ’13 +3.0% Chg. vs. Mar. ’12 -3.3% 2013 YTD -4.0%
April 25, 2013 Daily Dairy Report, Inc. 11
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Weekly Slaughter
40
45
50
55
60
65
70
75
1/5 2/5 3/5 4/5 5/5 6/5 7/5 8/5 9/5 10/5 11/5 12/5
(in 1,000 head)
2011 2012 2013
-‐4
-‐3
-‐2
-‐1
0
1
2
3
4
5
5-‐Jan 19-‐Jan 2-‐Feb 16-‐Feb 2-‐Mar 16-‐Mar 30-‐Mar
(1,000 Head)
West East Midwest
April 25, 2013 Daily Dairy Report, Inc. 12
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Overland Stockyard Sales Date Sales Descrip6on
April 12 900 milking, 200 replacements
April 3 2,000 head
March 28 12,000 head
March 15 3,000 milking, 3,000 replacements
March 1 1,500 head
February 28 10,000 head
February 20 4,500 milking
February 12 3,550 head replacements
February 8 2,300 Holstein cows, 1,450 Jersey & Jersey X
February 6 2,600 head
April 25, 2013 Daily Dairy Report, Inc. 13
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Income Over Feed Key States
$0
$3
$6
$9
$12
Q1 12 Q2 12 Q3 12 Q4 12 Q1 2013
California
Regional Milk Over Feed(in $ per cwt.)
$0
$3
$6
$9
$12
Q1 12 Q2 12 Q3 12 Q4 12 Q1 2013
Wisconsin
Regional Milk Over Feed(in $ per cwt.)
$0
$3
$6
$9
$12
Q1 12 Q2 12 Q3 12 Q4 12 Q1 2013
New York
Regional Milk Over Feed(in $ per cwt.)
$0
$3
$6
$9
$12
Q1 12 Q2 12 Q3 12 Q4 12 Q1 2013
Idaho
Regional Milk Over Feed(in $ per cwt.)
Daily Dairy Report, Inc. April 25, 2013 14
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Global Dairy Markets Why Should I Care?
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0
40,000
80,000
120,000
160,000
(1,000 M
etric
Ton
s)
2007 (f) 2012
Global Milk Production: Key Countries
Daily Dairy Report, Inc. April 25, 2013 16
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Global Dairy Production vs. Exports: Key Countries
8.6 9.5
19.4
38.1
3.6 4.4 1.6 3.3
0
10
20
30
40
50
NDM WMP Bu\er Cheese
(Bil. Lbs.)
Produc5on Exports
Daily Dairy Report, Inc. April 25, 2013 17
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Global Trade Statistics o New Zealand produces less than 5% of global milk production but
accounts for more than 50% of dairy product trade. o The European Union and the United States represent 30% and 20% of
global cow’s milk production. o Over 40% of global Nonfat Dry Milk (NDM) and Whole Milk Powder
(WMP) production is exported. Meanwhile, only about 10% of global cheese and butter production is exported.
o New Zealand dominates global WMP production with nearly a 30% share followed by China with a 27% share.
o The European Union and the United States dominate NDM production and trade.
• The European Union produces 33% of the world’s NDM and accounts for 36% of global NDM trade.
• The United States produces 25% of the world’s NDM and accounts for 28% of global trade.
o FAO estimates that 7% of global milk production is traded.
18 Daily Dairy Report, Inc. April 25, 2013
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Global Milk Production
30,000
40,000
50,000
JAN APR JUL OCT
Chart Title
2011 2012 2013
Milk Produc6on (AR,AU,EU,NZ,US) (30-‐day month, in million lbs.)
April 25, 2013 Daily Dairy Report, Inc. 19
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Change in YOY Global Milk Production
-‐500
0
500
1,000
1,500
2,000
Jan-‐12 Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan-‐13 Feb
(Million Lbs.)
YOY Chg Global Produc5on 4-‐Year Average Change
April 25, 2013 Daily Dairy Report, Inc. 20
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Export Summary Through February 2013
Million Lbs. % exports vs. 2012 % of Produc5on
NFDM/SMP 147.3 -‐14% 40%
Bu\er/Milkfat 19.9 +36% 5.2%
Total Cheese 96.1 +11% 5.4%
Cheddar Cheese 20.9 +1% 3.9%
Dry Whey (human) 77.4 -‐7.8% 45%
WPC (< 80%) 37.8 +46% 53%
Milk and Whey Protein > 80%
6.6 +2.3% 50% of WPI produc5on
Lactose > 99% 81.6 +40% *combined equates
Lactose < 99% 42.8 -‐14% To 75% of lactose produc5on
21 Daily Dairy Report, Inc. April 25, 2013
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$0.90$1.15$1.40$1.65$1.90$2.15$2.40$2.65
$2.90
Jan-‐12 Apr-‐12 Jul-‐12 Oct-‐12 Jan-‐13 Apr-‐13
International Price for SMPWorldBi-‐Weekly SMP Price(in USD per lb.)
NZ
GDT
EU NDPSR
22 Daily Dairy Report, Inc. April 25, 2013
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$1.40
$1.65
$1.90
$2.15
Jan-‐12 Apr-‐12 Jul-‐12 Oct-‐12 Jan-‐13 Apr-‐13
TitleOceania Europe (Edam) CME
WorldBiweekly Cheese Price(in USD per lb.)
23 Daily Dairy Report, Inc. April 25, 2013
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Domestic Demand
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0.30%
2.10%
2.60%
1.10%
0.40% 0.50%
2.20%
1.00% 1.10%
0.20% 0.50%
0.60%
0.0%
-0.3%
-2.4%
-1.9%
-0.6%
-2.1% -2.5%
-2.2%
-1.0%
-1.8%
-1.3%
-1.8%
-0.1%
-1.9%
-1.0%
-2.3% -1.9%
-1.3% -1.6%
-1.2%
-2.3%
-1.3% -1.6%
-3.9%
-2.4% -2.7%
-3.1%
-2.1% -2.3%
-0.1%
-1.8%
-0.1%
-1.5%
-0.1%
-1.7%
-2.2% -2.1%
-5.00%
-4.00%
-3.00%
-2.00%
-1.00%
0.00%
1.00%
2.00%
3.00%
Jan - 09 Jul Jan - 10 Jul Jan - 11 Jul Jan - 12 July Jan-13
Year%over%Year(Percentage(Change(of(Pounds(of(Fluid(Milk(Sales(by(Month((Federal(Milk(Market(Order(&(California)(
Fluid Milk Sales
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Commercial Disappearance
o Jan. – Dec. 2012 +1.7% Butter +1.6% American Cheese +2.0% Other Cheese +1.6% NDM +17.9% Fluid Milk -1.9%
o Nov. – Jan. 2013 +0.6% Butter -14.8% American Cheese +1.7% Other Cheese +1.2% NDM -33.6% Fluid Milk -2.1%
April 25, 2013 Daily Dairy Report, Inc. 26
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Dairy Product Production & Stocks
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U.S. Butter Production
100
125
150
175
200 Ja
n
Apr
Jul
Oct
(mill
ion
lbs.
)
2011 2012 2013
Chg. vs. Jan. '12 +0.8% Chg. vs. Feb. '13 +4.7% 2013 YTD +4.4%
April 25, 2013 Daily Dairy Report, Inc. 28
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Total Butter Stocks
0
100
200
300 Ja
n
Apr
Jul
Oct
(mill
ion
lbs.
)
2011 2012 2013
Chg. vs. Feb. '13 +22.4% Chg. vs. Mar. '12 +6.9%
April 25, 2013 Daily Dairy Report, Inc. 29
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Butter & Milkfat Exports
-
5.0
10.0
15.0
20.0 Ja
n
Apr
Jul
Oct
(mill
ion
Lbs.
)
2011 2012 2013
Chg. vs. Jan. '13 +21% Chg. vs. Feb. '12 +30% 2013 YTD +36%
April 25, 2013 Daily Dairy Report, Inc. 30
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American Cheese Production
320
340
360
380 Ja
n
Apr
Jul
Oct
(mill
ion
lbs.
)
2011 2012 2013
Chg. vs. Jan. '13 +2.1% Chg. vs. Feb. '12 +4.9% 2013 YTD +3.8%
April 25, 2013 Daily Dairy Report, Inc. 31
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American Cheese Stocks
550
600
650
700 Ja
n
Apr
Jul
Oct
(mill
ion
lbs.
)
2011 2012 2013
Chg. vs. Feb. '13 +2.9% Chg. vs. Mar. '12 +4.5%
April 25, 2013 Daily Dairy Report, Inc. 32
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Total Cheese Exports
-
25.0
50.0
75.0 Ja
n
Apr
Jul
Oct
(mill
ion
Lbs.
)
2011 2012 2013
Chg. vs. Jan. '13 +9.1% Chg. vs. Feb. '12 +8.7% 2013 YTD +11%
April 25, 2013 Daily Dairy Report, Inc. 33
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NFDM/SMP Production
75
125
175
225 Ja
n
Apr
Jul
Oct
(mill
ion
lbs.
)
2011 2012 2013
Chg. vs. Jan. '13 +4.9% Chg. vs. Feb. '12 -1.6% 2013 YTD -1.6%
April 25, 2013 Daily Dairy Report, Inc. 34
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California Milk Powder Production
0
20
40
60
80
100
120
Jan Apr Jul Oct
(Million Lbs.)
2012 2013
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NFDM Stocks
50
100
150
200
250 Ja
n
Apr
Jul
Oct
(mill
ion
lbs.
)
2011 2012 2013
Chg. vs. Jan. '13 +13.6% Chg. vs. Feb.'12 +16.5%
April 25, 2013 Daily Dairy Report, Inc. 36
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NDM/SMP Exports
0
50
100
150 Ja
n
Apr
Jul
Oct
(mill
ion
lbs.
)
2011 2012 2013
Chg. vs. Jan. '13 +23% Chg. vs. Feb. '12 -8.5% 2013 YTD -14%
April 25, 2013 Daily Dairy Report, Inc. 37
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2013/14 Outlook
Bullish o Lower global milk production o Negative weather conditions o Drought in Oceania o Late Spring in Europe and United
States o Higher feed costs and lack of
quality forages in 1H 2013 limit growth in milk per cow during Q2 2013.
o Strong exports
Bearish/Moderating o Higher milk prices and lower feed
costs could lead to greater milk production during Q3 2013 and lower milk prices during Q4 2013 and into 2014.
o Oceania drought subsiding o Bumper corn and bean crops o Moderating alfalfa prices o Global economy slow down;
namely China’s expected growth slowing to 7.7%
o Strength of US dollar vs. competitive currencies
April 25, 2013 Daily Dairy Report, Inc. 38