During the first four months of 2013, New Zealand (NZ) exported nearly 950,000 tonnes of dairy products into the global markets. In the same time period countries that are members of the European Union (EU) exported just over 720,000 tonnes of dairy commodities. The products included in these figures are: whole milk powder (WMP), skim milk powder (SMP), anhydrous milkfat (AMF), butter, cheese, and whey products.
This year many of the main exporting regions have not exported as much product as they typically do. During January – April 2013, dairy exports from the EU were 9% down in volume terms, whilst export volumes out of both Australia and Argentina were 8% down. During this early part of 2013, NZ pushed out 12% more product and the United States (US) also increased their exports by 5%. In volume terms the increase in US exports was mainly in the form of SMP. NZ managed to increase their exports of WMP, SMP and AMF during this time. May trade data indicates a slight slow down in exports out of NZ but this was mainly for butter and cheese. WMP volumes were virtually on par with the previous May, whilst SMP and AMF volumes were still elevated. The impact of NZ's drought is expected to show up to a much greater degree in the June trade data.
Likewise the US trade data is yet to reflect the increase in dairy products coming out of this part of the world. May and June data for the US are expected to show a increase in exports of SMP, cheese, and butter as the US looks to world markets to off load their excess stocks.
Supply from the main dairy exporting countries grew by just 1% during the first four months of this year. So it is not surprising that prices surged to record levels in late April. Since this time prices have eased back a little but supplies remain very tight. The situation will only be relieved when the southern hemisphere dairy production gets well underway. The new dairy season for NZ officially started a month ago and the Australia season commences today. However output will not reach significant levels for another couple of months. In the interim global supplies are expected to tightened further.
