Global Considerations

Transcription

1 What Does Being a Global Player Mean to the U.S. Dairy Sector? Global Considerations 2 1

2 A Decade of Change $8, 4,5 $7, 4, (Million $) $6, $5, $4, $3, $2, $1, 3,5 3, 2,5 2, 1,5 1, 5 (Million Lbs.) $ Value Volume Copyright Daily Dairy Report, Inc. 3 YTD October 214 Exports Million Lbs. % vs. 213 % of Production NDM/SMP % 54% Butter/Milkfat 144 1% 9.4% Total Cheese % 7.4% Cheddar Cheese % 5.5% Dry Whey (human) % 61% WPC (< 8%) 189 1% 43% Milk and Whey Protein > 8% % 72% of WPI production Lactose > 99% 394 5% *combined equates Lactose < 99% 238 2% to 65% of lactose production 4 2

3 Key U.S. Export Markets SMP/NDM Cheese Butterfat WPC Dry Whey Mexico Mexico Saudi Arabia China China China S. Korea Morocco Mexico Mexico Philippines Japan Iran Canada Canada Indonesia Canada Egypt Japan Japan 5 Global Milk Production: Select Countries (in billion pounds) Source: USDA FAS

4 Global Milk Production: Select Countries (f) 213 3% (Billion Pounds) % 13% 1 5 4% Source: USDA FAS 7 7 Selected Country Milk Production (28 to 213) Compounded Annual Growth Rate (CAGR) India 5.4% New Zealand Argentina 4.2% 4.1% Brazil 3.1% United States 1.2% EU 27 Mexico Canada Australia China.8%.7%.6%.5%.2%.6% Russia 1.%.8% Ukraine Japan 2.% 1.%.% 1.% 2.% 3.% 4.% 5.% 6.% Source: USDA FAS 8 4

5 Where s the Growth? Change in Milk Supply 213 vs. 28 (in billion pounds) India S. American EU 27 United States New Zealand China Former S.U Source: USDA FAS 9 Where s the Future Growth? Change in Milk Supply (in billion pounds) India S. American EU 27 United States New Zealand China Former S.U. *

6 Dairy Cost of Production USD$/1kg milk (energy corrected milk) >$6<=$12 >$5<=$6 >$4<=$5 >$3<=$4 >$2<=$3 <=$2 Source: IFCN 11 Dairy Cost of Production Low Cost (Argentina) Feed 37% Purchased Grown Grazed Labor 12% Fuel/Energy 1% Land/Rent 4% Financing 2% Other 37% Overhead 7% Mid Cost (U.S.A) Feed 54% Purchased 34% Grown 2% Grazed % Labor 15% Fuel/Energy 3% Land/Rent % Financing % Other 11% Overhead 17% High Cost (Europe) Feed 2% Purchased 14% Grown 5% Grazed 1% Labor 21% Fuel/Energy 4% Land/Rent 2% Financing 3% Other 41% Overhead 9% Source: USDA, Eurostat, Agrivalue S.A. 12 6

7 Global Dairy Trade: Selected Countries Trade Production Cheese Butter WMP NDM o o o Over 4% of global NDM and WMP production is exported. Meanwhile, only about 1% of global cheese and butter production is exported. FAO estimates that 7% of global milk production is traded (Billion Pounds) Source: USDA FAS Global Dairy Product Production and Exports 3, Nonfat Dry Milk 3,5 Whole Milk Powder 2,5 3, 2, 2,5 (Million Lbs.) 1,5 1, (Million Lbs.) 2, 1,5 1, 5 5 U.S. EU 27 India N.Z. Aus Production Exports Production Exports Source: USDA FAS 14 7

8 Global Dairy Product Production and Exports 12, Butter 25, Cheese 1, 2, (Million Lbs.) 8, 6, 4, (Million Lbs.) 15, 1, 2, 5, India EU 27 U.S. N.Z. Production Exports EU 27 U.S. Aus N.Z. Production Exports Source: USDA FAS The China Factor (Million Lbs.) 2,5 2, 1,5 1, 5 o o o China s combined imports of NDM and WMP have doubled since 211. The milk equivalent of China s estimated 214 powder imports is nearly 2 billion pounds. Just the increase in China s imports in 213 was equal to 4 billion pounds of milk. As New Zealand has become the dominate supplier of WMP to China, that has allowed the U.S. exports of NDM to grow in other Asian markets. WMP NDM Source: USDA FAS

9 The China Factor 9 Chinese SMP Imports 3 Chinese WMP Imports Million Lbs. 5 4 Million Lbs Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Global Milk Production Milk Production (AR,AU,EU,NZ,US) Chart Title 6, 5, 4, Copyright Daily Dairy Report, Inc. 18 9

10 So how much milk is that? 4, (In Billion Pounds) 3, 2, 1, (1,) Jan 1 Jun Jan 11 Jun Jan 12 Jun Jan 13 Jun Jan 14 Jun (2,) (3,) 19 U.S. Milk Production U.S. Milk Production 18, 17,5 17, 16,5 16, 15,5 15, 14,5 JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC 2 1

11 October YOY Change in Milk Production 14.% 12.% 1.% 8.% 6.% 4.% 2.%.% November October WPI Change 9 (3 day in in Milk month) Production YOY Chg TX CO UT MI KS ID FL WA SD IA VT PA NY OH MN AR CA WI IN VA NM OR IL U.S. Dairy Cows U.S. Dairy Cows (in million head) E Copyright Daily Dairy Report, Inc

12 Fewer Happy Meals? Monthly U.S. Dairy Cattle Slaughter (3 day month, in 1, head) Income Over Feed Key States Regional Actual Dairy Production Margin (in $ per cwt.) National California Wisconsin New York Idaho $2 $18 $16 $14 $12 $1 $8 $6 $4 $2 $ 1H 14 Q3 14 1/1/214 Copyright Daily Dairy Report, Inc

13 Income Over Feed Key States Regional Milk Over Feed (in $ per cwt.) Regional Milk Over Feed (in $ per cwt.) $12 California $12 Wisconsin $9 $9 $6 $6 $3 $3 $ Q1 212 Q2 212 Q3 212 Q4 212 $ Q1 212 Q2 212 Q3 212 Q4 212 Regional Milk Over Feed (in $ per cwt.) Regional Milk Over Feed (in $ per cwt.) $12 Idaho $12 New York $9 $9 $6 $6 $3 $3 $ $ Q1 212 Q2 212 Q3 212 Q4 212 February 213 Daily Dairy/KLA, Inc. Q1 212 Q2 212 Q3 212 Q USDA All Milk Price USDA is forecasting a 2% reduction in All Milk Price but New Zealand is looking for a 4% reduction, which would yield $14 All Milk Price $23 $19 $15 $ $/cwt * 215* 26 13

14 Milk Price Comparisons 48 Germany Bayern New Zealand United States (Euro Cents per Liter) U.S. 212 Drought Higher Cheese & Butter Prices Lower European Production & New Zealand Drought Higher Global Powder Prices Jan 1 Mar May Jul Sep Nov Jan 11 Mar May Jul Sep Nov Jan 12 Mar May Jul Sep Nov Jan 13 Mar May Jul Sep Nov Jan 14 Mar May Jul Sep Copyright Daily Dairy Report, Inc. 27 Global Dairy Product Price Comparisons World Bi Weekly Butter Price (in USD per lb.) Oceania German CME GDT $3.4 $3.15 $2.9 $2.65 $2.4 $2.15 $1.9 $1.65 $1.4 $1.15 $.9 Jan 14 Mar 14 May 14 Jul 14 Sep 14 Nov 14 Weekly World Cheese Price Title (in USD per lb.) $2.65 Oceania German (Edam) CME $2.4 $2.15 $1.9 $1.65 $1.4 Jan 14 Mar 14 May 14 Jul 14 Sep 14 Nov

15 Dairy Product Production, Stocks, and Exports Copyright Daily Dairy Report, Inc. 29 U.S. Cheese Production & Stocks Total U.S. WPI Cheese Sour Lactose 9 (3 day Cream Production Stocks month) 1, ,2 1,15 1,1 1,5 1, 95 9 U.S. Stocks of Total Cheese (in million lbs.) Copyright Daily Dairy Report, Inc. 3 15

16 American Cheese Production & Stocks American Cheese U.S. Stocks of American Cheese (in million lbs.) Copyright Daily Dairy Report, Inc. 31 US Cheese Exports U.S. WPI Cheese 9 (3 day &Curd & month) Exports U.S. U.S. WPI Cheese Cheddar 9 (3 day &Curd& Exports month) Exports

17 Mozzarella Production & Fresh Cheese Exports WPI 9 (3 day month) Mozzarella U.S. Fresh Cheese Exports JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC Copyright Daily Dairy Report, Inc. 33 The Power of Pizza South Korea Indonesia Saudi Arabia Shanghai, China Copyright Daily Dairy Report, Inc

18 NDM Production and Stocks U.S. NDM/SMP Production U.S. Manufacturers'Stocks of NDM (in million lbs.) NDM/SMP Exports U.S. WPI Exports NDM/SMP 9 (3 day NDM/SMP month) Exports WPI NZ SMP 9 (3 day Exports month)

19 What about Russia? 2 EU WPI Cheese 9 (3 day Exports month) 3 day month, in million lbs.) Reality Check o The U.S. is a player in the global dairy market o This brings opportunities as well as challenges o The real question is whether we want to play J.V., Varsity or Professional. What are policy implications? 38 19

20 What About MPP? All Milk Price Feed Costs Margin Corn Soybean Meal Alfalfa $16. $7.38 $8.62 $3.25 $25 $15 $15. $7.38 $7.62 $3.25 $25 $15 $14. $7.38 $6.62 $3.25 $25 $15 $15.5 $7.12 $8.38 $3. $25 $15 $15.5 $8.19 $7.31 $4. $25 $15 $15.5 $9.26 $6.24 $5. $25 $15 $15.5 $8.73 $6.77 $3.5 $35 $175 $16.5 $1.51 $5.99 $4.5 $4 $2 $17.5 $12.3 $5.2 $5.5 $45 $225 Copyright of Daily Dairy Report 39 2