Dairy Foods & Beverages / Whey, Milk Powder
Exports

Five things dairy exporters need to keep an eye on in 2014

Watch out for China, WMP supplies in the United States and the Transpacific Partnership.

October 25, 2013
/ Print / Reprints /
ShareMore
/ Text Size+

U.S. dairy exports, by value, are on track to top $6.5 billion in 2013 – another record, and up more than 25% from the year before.

And while it’s tempting to call this year exceptional that wouldn’t be the case, says Alan Levitt, the vice president of communications and market analysis for the U.S. Dairy Export Council, Arlington, Va.

He notes that over the last decade, the value of U.S. dairy exports has increased, on average, 20% per year. If U.S. dairy exports were a mutual fund, it would get a five-star rating, Levitt writes in the November Dairy Foods (online next month). As for that 25% gain? This would be the sixth time in the last 10 years.

Global dairy markets are cyclical, so as conditions turn next year, it may be more challenging for U.S. suppliers to defend the share they gained in 2013. Levitt identifies five things to keep an eye on that could shape the market outlook.

1. World milk supply comes back

The world is back in growth mode again. Higher payouts – coupled with lower feed costs – means farmgate margins are much improved. So far, weather is better. New Zealand is off to a good start in their 2013/14 season; production is expected to be up 5-6% this year. European production is back in the black as well, and exportable supply should improve in the year ahead.

After a down year, milk production from the five major exporters is estimated to be around 274 million tons in the year ending June 2014, up 2.3% (+6.1 million tons) vs. the prior year. As more supply comes on it will put downward pressure on international commodity prices.

2. China's demand for whole milk powders underpins the world markets

Milk production in China reportedly was down 6% in the first half of 2013, mostly due to poor weather, necessitating greater imports. In addition, it’s still cheaper to import milk powder than produce fresh milk at home, where production costs are among the highest in the world. Meanwhile, their appetite doesn’t appear to be slowing anytime soon.

China purchases of whole milk powder (WMP) were on track to top 500 million tons in 2013, compared with virtually nothing five years ago. They’ve also become the world’s number-two importer of skim milk powder. China’s WMP imports alone require more than 4 million tons of milk, and they’ll continue to be the world’s biggest buyer in 2014.

3. The United States adds WMP supplies 

Whole milk powder is a huge global market (world trade approximately 2.1 million tons) but the United States is not a player. U.S. production over the last four years is about 30,000 tons per year. Now that’s changing. Several companies have undertaken WMP projects this year that will add initial new capacity of more than 10,000 tons per month.

This development is a game-changer in the evolution of the U.S. dairy industry as a global supplier. Significantly, all this new production will go overseas. It also represents a shift in mindset: by adding WMP to our product mix, these new facilities reinforce that U.S. suppliers are becoming more responsive to the needs of the global market, and it changes the way the world see us as well by demonstrating our commitment to exports.

4. The Transpacific Partnership (TPP) gets done

The United States has been relatively disengaged from trade talks over the last six years, but recent progress is encouraging. TPP negotiations are nearing the end-game, with only the most contentious issues still on the table. The addition of Canada and Japan to the talks this year adds huge potential upside if the final agreement includes improved access for dairy. Look for the pact to be signed by mid-2014.

5. Whey’s nutritional reputation makes further inroads 

International prices for dry whey have averaged nearly 60¢/lb. over the last three years, compared with around 36¢/lb. in the previous three years. In addition, more of the whey stream is shifting towards higher-protein fractions – whey protein concentrates (80% and above) and isolates. On the world market, WPC-80 has averaged better than $4.50/lb. this year, double what it fetched three years ago.

The sports nutrition market remains hot, but in some markets it’s being eclipsed by applications in infant and medical nutrition. The demand for protein in developed countries as well as developing markets will continue to outstrip the available supply for the foreseeable future, keeping prices firm throughout the whey complex.

 

Did you enjoy this article? Click here to subscribe to Dairy Foods Magazine. 

Recent Articles by Alan Levitt

You must login or register in order to post a comment.

Multimedia

Videos

Image Galleries

Agropur, Natrel Division USA, St. Paul, Minn.

 At its Natrel Division plant in St. Paul, Minn, Agropur makes rBST-free white and flavored milk, heavy whipping cream, half n half, buttermilk, organic milk, nutritional drinks and shakes and sport drinks. Nondairy beverages (soy, rice, coconut, and almond) coffee creamers, broth and sauces. 

BehindtheScenes

This photo gallery contains additional, unpublished photos of dairy processing facilities featured in Dairy Foods magazine. To view more Behind the Scenes galleries go to our archives page!

9/23/14 2:00 pm EDT

Milk/Flavored Milk and Non-Dairy Beverages: Opportunities in the Beverage Segment

This free webinar will cover methods and ingredients available to increase protein levels, processing issues related to high-protein beverages, future ingredients and opportunities for protein fortification, adding value to milk and beverages, niche markets for high-protein milk and beverages and case studies of Core Power and Fairlife.

Frozen Desserts

What’s your preferred frozen dessert?
View Results Poll Archive

Dairy Foods Magazine

september cover

2014 September

Joseph Gallo Farms wins honors for its cheeses, sustainability practices; plus we look at what's happening with frozen desserts.

Table Of Contents Subscribe

THE DAIRY FOODS STORE

tharp-and-young-on-icecream.gif
Tharp & Young on Ice Cream: An Encyclopedic Guide to Ice Cream Science and Technology

An at once an all-inclusive guide to the meaning of hundreds of technical terms and ideas needed for ice cream manufacturing, as well as a practical introduction to the ingredients, freezing methods, flavoring, and packaging of ice cream, sherbet, sorbet, gelato, frozen yogurts, novelties and many other kinds of frozen desserts.

More Products

Clear Seas Research

Clear Seas ResearchWith access to over one million professionals and more than 60 industry-specific publications, Clear Seas Research offers relevant insights from those who know your industry best. Let us customize a market research solution that exceeds your marketing goals.

Dairy Foods Buyers Guide

cover df july 2013Resource for buyers in the dairy processing industry to find information on the leading suppliers and manufacturers.

Find Ingredients, Equipment, Distribution, R&D and More.

Start Your Search Today.

STAY CONNECTED

Facebook logo 40px 2-12-13 Twitter logo 40px 2-12-13  YouTube logo 40px 2-12-13  LinkedIn logo 40px 2-12-13google plus