November 2019MARKET OUTLOOK
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MARKET INSIGHTS• Domestic:
• U.S. milk production strengthened in September, up 1.3% from the prior year
• In preparation for the holiday buying season, production of all major U.S. dairy product categories experienced growth in September
• U.S. dairy export volumes were mixed across production categories but increased overall, led by cheese and powder exports
• Global:• European milk production grew
modestly in September, while Oceanian production trended down
• Through September, China continued to import increasing amounts dairy products, with imports up nearly 10% year to date, with top imports including milk and cream, whole milk powder, skim milk powder and infant milk formula
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Sources: USDA, U.S. Dairy Export Council, CLAL
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U.S. MILK PRODUCTION
Source: USDA National Agricultural Statistics Service
MILLION METRIC TONS
• Total milk production in September was 7.9 million metric tons, an increase of 100 thousand metric tons from the prior year.
• In September, cow numbers were reported at 9.32 million head, relatively steady from the prior year.
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Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
2017 2018 2019
September 2019: +1.3% prior year
YEAR-TO-DATE 2019:+0.2% prior year
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Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
2017 2018 2019
U.S. TOTAL CHEESE PRODUCTION
Source: USDA National Agricultural Statistics Service
THOUSAND METRIC TONS
September 2019: +2.1% prior year
YEAR-TO-DATE 2019:+1.1% prior year
• Total cheese production in September was 490 thousand metric tons, up 10 thousand metric tons from the prior year.
• American cheese production was weaker, down 3 thousand metric tons.
• Other-than-American cheese production increased, up 13 thousand metric tons.
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2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019F
Domestic consumption Exports
U.S. TOTAL CHEESE COMMERCIAL DISAPPEARANCE
Source: USDA Economic Research Service*see disclaimer on slide 2
MILLION METRIC TONSYTD 2019 DOM. CONSUMPTION:+1.7%
YTD 2019 EXPORTS:+3.2%
• September exports were up 3 thousand metric tons to 27 thousand metric tons.
• Domestic demand also increased in September, up 16 thousand metric tons to 474 thousand metric tons.
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Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
2017 2018 2019
U.S. TOTAL CHEESE INVENTORY
September 2019: -0.8% prior year
Source: USDA National Agricultural Statistics Service
THOUSAND METRIC TONS
• Total cheese inventories increased modestly from August to September.
• Total cheese inventories were reported at 621 thousand metric tons, down 5 thousand metric tons from September 2018.
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2017 2018 2019
U.S. AMERICAN CHEESE INVENTORY
September 2019: -4.0% prior year
Source: USDA National Agricultural Statistics Service
THOUSAND METRIC TONS
• American cheese inventories remained well below prior year levels.
• American cheese inventories were reported at 350 thousand metric tons, down 15 thousand metric tons from September 2018.
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U.S. OTHER-THAN-AMERICAN CHEESE INVENTORY
September 2019: +3.8% prior year
Source: USDA National Agricultural Statistics Service
THOUSAND METRIC TONS
• Other-than-American cheese inventories were reported at 271 thousand metric tons, up 10 thousand metric tons from September 2018.
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U.S. VS. GLOBAL CHEESE PRICE
Source: USDA Agricultural Marketing Service, CME Group, EU Commission
$ PER METRIC TON
• U.S. cheese prices remain at a premium to global prices as exports and domestic demand remain high
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CME Blocks Oceania Cheese (moist adj) EU Cheese
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2017 2018 2019
U.S. BUTTER PRODUCTIONTHOUSAND METRIC TONS
Source: USDA National Agricultural Statistics Service
September 2019: +1.2% prior year
YEAR-TO-DATE 2019:-0.5% prior year
• In September, butter production was reported at 62 thousand metric tons, up less than 1 thousand metric tons from the prior year.
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2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019F
Domestic consumption Exports
U.S. BUTTER COMMERCIAL DISAPPEARANCE
Source: USDA Economic Research Service*see disclaimer on slide 2
MILLION METRIC TONSYTD 2019 DOM. CONSUMPTION:+0.9%
YTD 2019 EXPORTS:-31.2%
• After year-over-year strength in August, September domestic consumption declined, weakening 1 thousand metric tons to 66 thousand metric tons from the prior year.
• Exports of butter were reported at 2 thousand metric tons, down 332 metric tons from the prior year.
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U.S. BUTTER INVENTORYTHOUSAND METRIC TONS
Source: USDA National Agricultural Statistics Service
September 2019: +7.0% prior year • Butter inventories increased
9 thousand metric tons from the prior year to 137 thousand metric tons in September.
• From August to September, butter inventories were relatively unchanged.
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U.S. VS. GLOBAL BUTTER PRICE
Source: USDA Agricultural Marketing Service, CME Group, EU Commission
$ PER METRIC TON
• As production has increased and stocks have replenished, butter prices have declined in recent months
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CME NFDM Oceania butter (fat adj) EU butter
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2017 2018 2019
U.S. NFDM & SMP PRODUCTIONTHOUSAND METRIC TONS
Source: USDA National Agricultural Statistics Service
September 2019: +6.9% prior year
YEAR-TO-DATE 2019:-1.1% prior year
• In September, both NFDM and SMP production increased from the prior year.
• NFDM production strengthened 4 thousand metric tons to 56 thousand metric tons.
• SMP production grew 1 thousand metric ton to 22 thousand metric tons.
• Together, NFDM and SMP production grew 5 thousand metric tons from the prior year to 78 thousand metric tons in September.
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U.S. NFDM vs. SMP PRODUCTIONTHOUSAND METRIC TONS
Source: USDA National Agricultural Statistics Service
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2017 2018 2019NFDM SMP
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2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019F
Domestic consumption Exports
U.S. NFDM & SMP COMMERCIAL DISAPPEARANCE
Source: USDA Economic Research Service*see disclaimer on slide 2
MILLION METRIC TONSYTD 2019 DOM. CONSUMPTION:+11.7%
YTD 2019 EXPORTS:-10.9%
• After ten consecutive months of year-over-year declines, powder exports rebounded in September, increasing 13 thousand metric tons to 65 thousand metric tons.
• Conversely, domestic consumption declined, down 10 thousand metric tons to 20 thousand metric tons.
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U.S. NFDM INVENTORY THOUSAND METRIC TONS
Source: USDA National Agricultural Statistics Service
September 2019: -2.9% prior year
• Inventories were down 3 thousand metric tons from the prior year to 115 thousand metric tons in September.
• Inventories were down 7 thousand metric tons from August to September.
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U.S. NFDM VS. GLOBAL SMP PRICE
Source: USDA Agricultural Marketing Service, CME Group, EU Commission
$ PER METRIC TON
• Global powder demand remains strong, especially from China
• As domestic inventories continue to trend down year over year, prices have strengthened
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CME NFDM Oceania SMP (Prot adj) EU SMP
GLOBAL MILK PRODUCTION
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YTD through September 2019
United States74.6 million MT
+0.2%
European Union120.6 million MT
+0.5%
Oceania18.9 million MT
-3.1%
Total214.1 million MT
+0.0% Sources: USDA National Agricultural Statistics Service, U.S. Dairy Export Council
U.S. DAIRY EXPORTS
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YTD through September 2019
Source: USDA Foreign Agricultural Service
U.S. TOP DAIRY EXPORT DESTINATIONS
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Rank Country September 2019 YTD 2019
1 Mexico 53.8 444.1
2 China 15.3 147.0
3 Indonesia 11.5 80.6
4 Canada 10.2 98.9
5 Philippines 9.9 97.9
6 Vietnam 8.8 64.7
7 Japan 8.5 84.9
8 South Korea 8.3 86.5
9 New Zealand 6.0 58.2
10 Australia 3.9 32.5
THOUSAND METRIC TONS, TOTAL DAIRY PRODUCTS
Source: USDA Foreign Agricultural Service
U.S. TOP DAIRY EXPORT DESTINATIONS
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Rank Country September 2019 YTD 2019
1 Mexico $144.8 $1,127.9
2 Canada $52.0 $502.0
3 China $28.2 $278.6
4 South Korea $26.2 $263.1
5 Indonesia $24.7 $162.5
6 Japan $22.9 $218.8
7 Philippines $20.2 $194.1
8 Vietnam $18.2 $120.7
9 Australia $13.8 $113.0
10 Peru $10.0 $56.4
MILLION DOLLARS, TOTAL DAIRY PRODUCTS
Source: USDA Foreign Agricultural Service