By Alexandria Winning-Browne, NZX dairy analyst
New Zealand’s December export figures were released last week, giving us the full 2022 calendar year of dairy exports for the nation. While we had a positive result in December YoY, up 2%, total exports declined 7% for the full 2022 calendar year, with consecutive declines through the middle of the year. Commodity export shifts were driven by a change in stream returns, with a pull away from whole milk powder (WMP) processing and a shift towards the skim milk powder (SMP) and milkfat stream.
Milk powders had a mixed year of exporting. WMP exports declined 18% YTD with only 1.358 million tonnes. This figure was compared to a record year of WMP exports the year prior. However, when going back to 2020 and 2019, the 2022 full year of WMP exports declined 12% and 13% compared to those years, respectively.
China was the main driver of WMP demand slipping, with the country taking a whopping 48% less WMP for 2022. This figure is even more significant when you look at China’s market share in 2021, taking 51% of NZ’s WMP exports. This figure declined 32% in 2022 with Indonesia and Algeria notably taking more share of the market, increasing 3% and 6% respectively year on year. In fact, Indonesia took just under double the WMP tonnage that it took in 2021, while Algeria nearly tripled its purchases.
SMP, on the other hand, had a positive year in 2022 with an increase of 10% when compared to the year before. SMP exports have steadily increased over the past couple of years, in fact. On top of 2022’s increases against the previous year, SMP exports in 2022 increased 2% on 2020 too. Notable increases came from Indonesia and Thailand, up 111%, and 17% YoY respectively. Additionally, Algeria has increased its purchases significantly, taking 12,745t of NZ SMP in 2022 compared to none the year prior, 3.5% of the market share of NZ SMP exports in 2022.
Milk fats had a positive year of exporting. Anhydrous milk fat (AMF) exports increased 16% YTD. China and Mexico drove this increase, up 56% and 29% in 2022 compared to the previous year. Unsurprisingly, this drove both countries’ market share up, with Mexico increasing its market share by 3% to 11% of total NZ SMP exports. China took a much larger share of NZ SMP exports, increasing 3% also, to 21% of total NZ SMP exports.
Butter exports also increased YTD, up 10% with exports headed for Saudi Arabia, Indonesia, China, Taiwan, and Australia driving the increase, up 8%, 62%, 14%, 4%, and 17% compared to the previous calendar year. Market share has remained relatively stable compared to the previous year, with China taking out the largest share at 32%.
Cheese and whey exports both had a negative year in exports, down 5% and 14% YTD respectively. Cheese export declines were driven by China, South Korea and Australia, while the Philippines and Australia attempted to offset the declines with increases YTD. Whey exports were driven by the US, who takes majority share of NZ whey exports at 40% of the market. The US’s purchases of NZ SMP declined 20% YTD in 2022. Singapore also supported this decline, taking 27% less YTD, however with much less market share, counting for 9% in 2021 and declining to 7% in 2022.
What else happened in dairy?
EU-27 + UK milk production
EU-27 + UK milk production for November highlights an increase of 2.1% year on year with Germany, France, UK, Netherlands, and Poland reporting increases. Germany continues to put out positive results with the nation reporting a 3.9% increase YoY with 2,543,000mt produced in the month of November. The nation has weathered a relatively mild winter through the last few months, with indications that future months figures will remain positive.
YTD the EU is still reporting a 0.2% decline with months earlier in the year suffering unfavourable conditions for farming. The Netherlands and Poland however, have reported increases YTD, up 0.9% and 2.2% and the remaining top six nations all now sit at a YTD deficit of less than 1%. This is the largest increase the EU has had for a month YoY since May 2021.
Global Dairy Trade (GDT) Pulse Auction
Regular grade whole milk powder (WMP) prices sold on the GDT Pulse auction platform gained 3.2% at this week’s auction, settling at US$3303/t, up US$103/t from the previous Pulse auction, and up US$123/t from the WMP regular price achieved at GDT event #324.
There were 8 (no change) winning bidders, from 28 (up 4) participating bidders. The auction lasted 15 rounds (up five), taking 27 minutes; this is the longest GDT Pulse auction to date. However, only 970t of the 1,000t offer volume was sold (97%).
This Pulse auction result prices regular WMP in line with where the nearest SGX-NZX WMP future is priced currently, which finishing trading last night, prior to the auction, at US$3,305/t. This contract has lifted US$45/t since Tuesday’s trading. This result potentially implies that physical prices are moving higher.
