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Global Dairy eBrief
March 3, 2016, Vol. 23, No. 9


EU December milk output rises 5.7 percent, finishes 2015 up 2.5 percent
December EU milk production rose 5.7 percent compared to the previous year, offering little evidence that farmers were inclined to slow the pace of growth. (Note: USDEC adjusts EC data for Italy, as the reliability of the Eurostat data for Italy has been questioned. Our estimates of monthly EU-28 milk deliveries can be found here.) Indeed, in January, milk deliveries in Ireland and the Netherlands grew 16 percent over January 2015.

Calendar year 2015 EU milk collection increased 2.5 percent to 152.1 million tons (3.7 million tons more than the previous year). A 1 percent decline in the first quarter (prior to quota removal) was the only factor preventing a significantly larger volume of new milk.

Milk production growth leaders in 2015 included Ireland (+13.3 percent), the Netherlands (+6.8 percent) and Belgium (+7.2 percent). Ten other EU members recorded gains of more than 2 percent.

EU farmgate prices continue to fall but so far have had little effect on milk production gains. Danish Dairy Board explains it this way: “Milk producers are suffering and their liquidity is strained to the limit. In this situation, you are doing what you can to get some cash flow to your enterprise, and the way you do that is to increase milk production—a good solution for the producer, but a bad solution for an oversupplied market.” (Milk Market Observatory; Dairy Markets, 2/29/16)



Click charts to view larger images in your web browser.


A rising index means that an importer’s currency is strengthening against the U.S. dollar. A falling index means that an importer’s currency is weakening against the dollar. When an importer’s currency is strengthening against the U.S. dollar (weak US$), the importer’s purchasing power increases; when an importer’s currency is weakening against the U.S. dollar (strong US$), the importer’s purchasing power decreases. Source:


Note: Numbers in parentheses are changes from previous period. Source: USDA and commercial contacts

USDEC members receive preferential rate for Global Trade Atlas access
Approximately five years ago, USDEC sponsored access to Global Trade Atlas (GTA) as part of on-going efforts to provide increased value for USDEC membership. Over the years, several members have availed themselves of this service.

GTA was recently acquired by iHS Maritime and Trade, but has agreed to continue providing heavily-discounted access to USDEC members. There is, however, a modest 5 percent increase in the cost this year. (It is the first GTA price increase in more than a decade.) The new price equates to $1,050 per four-digit HS Code.

Details of the program and information about Global Trade Atlas are listed below. If you are interested in a one-year subscription at these preferred rates, please contact Max Jallad, senior physical commodities specialist at iHS, at Max will set up your account, invoice you directly and provide training.

Discounted access only applies to the dairy category. Available four-digit dairy HS Codes include: 0401, 0402, 0403, 0404, 0405, 0406, 1702, 1901, 2105, 3501 and 3502. Please note that any number of your staff may access the system with one subscription, though each staff member must sign up for a separate password.

A subscription allows users to:

  • Access the GTA interface
  • Display trade data monthly, quarterly, biannually or annually for multiple years (as far back as 1990)
  • Compare value, quantity and unit-price among 86 countries
  • Convert quantities into common units of measure
  • Find any HS product code by keyword or number
  • Access analysts, training and customer care support

If you have any questions, please contact Dan Ingram at Members who subscribed in 2015 will receive a separate renewal invoice.

Meet overseas reps one on one at USDEC spring board meeting
USDEC invites members to meet one-on-one with up to four overseas representatives during the Spring Board of Directors Meeting, April 6-8 at Chicago’s Swissôtel. Daniel Chan from China, Jeff McNeill from Japan, Dali Ghazalay from Southeast Asia and Nina Halal from the Middle East will be available by appointment from 7:30 to 12:00 p.m. on Friday, April 8. To reserve meeting times, contact John Klees at or 703-528-3049.

Registration for the Board of Directors and Annual Membership Meeting is open. Make hotel reservations now to secure the discounted hotel rate, which ends March 15. For a preliminary agenda of the event, click here.

Denver Dairy Plant Food Safety Workshop to focus on dry products
The upcoming Denver session of the Innovation Center for U.S. Dairy’s Dairy Plant Food Safety Workshop is a special dry products edition, focusing on milk powder, whey protein and other ingredients. With over half of U.S. milk powder, whey and lactose exported annually, the Denver workshop is especially relevant to many USDEC members.

Leprino Foods, Hilmar Cheese and Ingredients and California Dairies Inc. will host the Denver session, which takes place May 17-18.

More than 1,300 industry professionals have attended the Innovation Center’s popular workshop series over the last four years. The classes combine lectures with hands-on, interactive exercises and explore a range of topics, including pathogen control, environmental monitoring, sanitary design, corrective actions and sanitation.

“They provide a unique chance to ask questions in a safe environment and to compare notes with peers who face similar challenges,” says Tim Stubbs, VP, product research, DMI. “When it comes to food safety, the dairy industry continues to take a proactive stance to protect consumers.”

After Denver, the remainder of this year’s sessions cover both wet and dry products. Those dates and locations are as follows:

  • June 7-8, Plymouth, Wis., hosted by Sargento Foods and Foremost Farms USA
  • August 23-24, Hiram, Ohio, hosted by Great Lakes Cheese
  • October 25-26, Arden Hills, Minn., hosted by Land O’Lakes and Glanbia Foods

For more information or to register, click here.

Honduras provides greater certainty on common cheese names
Extensive discussions between the U.S. and Honduran governments resulted in increased clarity about Honduras’s treatment of common cheese names. The EU had secured provisions through a free trade deal with Honduras that threatened to restrict the use of numerous commonly used food names. It is just one of many countries where the EU has been utilizing FTAs to unfairly restrict competition.

U.S. officials worked with Honduran authorities to clearly identify the scope of protection for various geographical indications, provide assurances on many commonly named products and take additional measures that not only provide greater clarity on the right to use generic names but also establish a better model for how Central American countries in similar positions can more reliably provide such information in the future. For more details, read the USDEC press release commending the U.S. government’s work on the matter.

Australia takes largest slice of ALIC whey tender
Nine countries shared in Japan’s 2,500-ton Agriculture and Livestock Industries Corp. (ALIC) SBS whey tender on March 1. Australia secured the largest portion: 891.9 tons or 36 percent of the total. The United States won 286.2 tons. Other winners by volume were France (398.8 tons), Germany (348 tons), Spain (248 tons) and Finland (175 tons), with Argentina, Netherlands and Poland taking 70 tons or less each. The average price was ¥175,245/ton or about US$1,550/ton. (USDEC Japan office)



GDT posts first gain of 2015
A 5.5 percent increase in the average winning WMP price helped drive the GlobalDairyTrade (GDT) Index to its fist increase in 2016 at the March 1 auction. The GDT Index rose 1.4 to US$2,253/ton. Although NZX futures anticipated the rise, market fundamentals are unchanged and a turnaround is still considered well off.

The WMP price (US$1,974/ton) remains 39 percent below year ago levels and 30 percent below its most recent peak in October. The average winning price declined for butter (-0.5 percent to US$2,811/ton), AMF (-8.3 percent to US$3,254/ton) and cheddar (-0.7 percent to US$2,528/ton ). SMP rose 1.3 percent to US$1,802/ton.

Although Chinese purchasing improved in January (see Global Dairy eBrief, 2/25/16), media reports on China continue to raise questions about the nation’s economic health and demand growth in the near term. (USDEC staff; GDT;, 3/2/16; Dow Jones Newswires, 3/1/16, 2/16/16)

NZ farmers slash costs as Rabobank admits some will not survive
New Zealand dairy farmers are reportedly trimming expenses everywhere possible as market signals suggest 2016/17 farmgate milk price forecasts might point to a third straight year of farmers operating at a loss. Media reports cite farmers laying off staff because they cannot afford salaries and turning to family members for assistance.

Rabobank this week admitted not all farmers would survive and it “wasn’t in the bank’s interest to fund losses where losses can’t be repaid even when markets improve.” The New Zealand government continues to meet with banks to encourage continued support to farmers, citing the bright medium-to-long-term outlook for the sector.

There is growing sentiment that New Zealand dairy production will fall in 2016/17 as farmers opt to milk fewer cows and reduce costs. (New Zealand Herald, 3/2/16;, 3/1/16; Dow Jones Newswires, 3/1/16)

ABARES forecasts Aussie milk production up 2 percent despite rising costs
The Australian Bureau of Agriculture, Resource Economics and Rural Sciences (ABARES) forecast Australian milk production would rise just over 2 percent to 10.1 million tons for the 2016/17 season. The number is an optimistic projection given that farmgate milk price erosion is showing signs of spreading to Australia, global markets remain oversupplied, and Australian dairy farmers and processors are facing long-term input cost hikes.

Speakers at the recent Australian Dairy Conference told attendees that they need to face up to the reality of rising water prices. Water prices more than doubled in some regions over the past year, as drought tightened supply. Long-term deficiencies persist, particularly in Victoria, Queensland and New South Wales. Although water prices will fluctuate annually moving forward, the overall direction is up, speakers said.

In addition, the Australian dairy sector has expressed concern over the potential for rising shipping costs due to the government’s sale of the Port of Melbourne (which handles more than 85 percent of Australia’s dairy exports). The Australian Parliament is set to hear specifics on the proposed deal next week.

Australian milk output declined every month from October 2015-January 2016 vs. the previous year. Through seven months of the 2015/16 year, it was down 0.6 percent. (DairyAustralia; Reuters, 2/29/16; The Australian Dairyfarmer, 2/29/16; ATN, 2/26/16; Farm Weekly, 2/25/16; Stock Journal, 2/16/16; Dairy Markets, 2/5/16)

Data Updates on
Have you checked out the interactive charts of market and trade data on the USDEC website? Key metrics like milk production, exports and imports and prices are updated regularly. This week we learned:

  • Milk production from the top 5 suppliers was up 2.0 percent in January.
  • In January, New Zealand exported 146,000 tons of WMP (+6 percent); 52,000 tons of SMP (+14 percent) and 37,000 tons of cheese (+21 percent).
  • Japan cheese imports were up 11 percent in January, while South Korea’s cheese imports were down 17 percent compared with the prior year.
  • Russia imported just 3,109 tons of cheese and 3,076 tons of butterfat in December (excluding purchases from Belarus).
  • Iran imported nearly 47,000 tons of butterfat in 2015, up 24 percent from 2014.
  • Indicative price and currency graphs are updated weekly as well.
To browse the full Market Data section of, click here.



FrieslandCampina looks to buy majority stake in Pakistan’s Engro
FrieslandCampina is considering buying a 51 percent stake in Engro Foods, Pakistan’s second-largest public dairy manufacturer. At the recent share price, that would cost the Dutch dairy giant about $500 million. (Company reports; Bloomberg, 3/3/16)

Vinamilk inks Mideast supply deal
At last week’s Gulfood show, Vietnam’s Vinamilk signed commercial contracts to supply $12.5 million of sweetened condensed milk and milk powder. The milk powder is destined for infant and follow-on formula. Vinamilk is aiming to grow its export business in the Middle East by 10 percent per year, with a focus on markets such as Iraq, Syria and Yemen. Buyers in those nations are reportedly being drawn to lower Vietnamese prices. (USDEC Vietnam office)

CDI looks to build milk flows
California Dairies Inc. (CDI) is looking to grow its milk supply. A recent capacity optimization project increased milk handling capacity 2.5 million lbs. per day, a number augmented by growing sales from its core business and its wholly owned subsidiary Challenge Dairy Products. The co-op is now accepting new membership applications. (Company reports)

Murray Goulburn moves ahead with milk powder plant
Australia’s Murray Goulburn plans to formally announce an A$260-$300 million expansion (about US$185-$215 million) at its Koroit, Victoria, manufacturing plant in the coming weeks. The addition would reportedly produce up to 63,000 tons of SMP, WMP, infant formula and nutritional-base powders primarily for export to Asia. The company plans to launch its own infant formula brand, Natra Start, in Australia this month and in China by May. Murray Goulburn first mentioned the Koroit project in April 2015 and has been working to secure anchor supply agreements to support the investment. (The Weekly Times, 3/1/16)

Company news briefs
Fonterra plans to make a final decision on whether to close its Kaikoura, South Island, cheese factory by mid month. Transferring Kaikoura production to other sites in its plant system would deliver “significant savings,” Fonterra says. The facility operates only three-to-five months a year, producing up to 28 tons per day . . . UAE-based Delta Food Industries opened a $10-million evaporated milk and cream plant in the Sharjah Airport International Free Zone. Delta distributes to 20 nations in the Middle East and Africa . . . Midia Agro, a unit of Switzerland-based real estate firm Midia Group, plans to build a €98-million (about US$107-million) dairy ingredient plant near Nitra, Slovakia. Midia Agro expects to complete the facility in the first quarter of 2018, with product earmarked for infant nutrition manufacturers in Asia. (Company reports; Emirates News Agency, 3/1/16; The Slovak Spectator, 3/1/16)

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