Not rendering correctly? View this email as a web page here.
Global Dairy eBrief
May 7, 2015, Volume 22, Issue 18

FEATURED 

March dairy export volume highest since June 2014

U.S. dairy export value totaled $545.4 million in March, a 24 percent decline from the same month the previous year, according to FAS data released this week. U.S. suppliers shipped 181,950 tons of milk powders, cheese, butterfat, whey and lactose in March, a 9 percent fall. But the declines obscure some solid performances in select categories, particularly given current market conditions.

The 181,950 tons was the highest monthly total since June 2014, and March volume grew 19 percent on a daily average basis from February 2015.

Cheese, SMP and WPI recorded particularly strong months. March SMP sales grew 7 percent to 55,022 tons, compared to last year. Volume was up 40 percent vs. February 2015 on a daily average basis. WPI shipments rose 60 percent to 3,717 tons.

Cheese exports fell 5 percent vs. March 2014, but March 2014 was a monthly volume record. March 2015 cheese exports were actually the second best month the United States has ever recorded for total volume (converted to a 30-day month, it was the fifth best month).

For a deeper look into the numbers, visit the Research & Data section of usdec.org or click here.

CURRENCY AND PRICES

Click charts to view larger images in your web browser.

currencychartGDeB

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: Oanda.com

exportpriceschartGDeB

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

Update: Mexico’s front-of-package deadline remains June 30
Mexico's Federal Commission for the Protection Against Sanitary Risk (COFEPRIS) of the Ministry of Health held a seminar on April 28 to review new front-of-pack (FOP) labeling requirements for pre-packaged goods that are due to enter into force on June 30 (see Global Dairy eBrief, 2/19/15 or the Feb. 18 U.S. Dairy Export Blog entry). Click here for an unofficial translation of the COFEPRIS presentation.

Rodrigo Fernandez from the USDEC Mexico office attended the seminar, and highlighted the following points:

  • Mexico is unlikely to extend the June 30 implementation date. However, individual importers may still apply for an extension of up to one year, which COFEPRIS will review on a case-by-case basis (see Hot Topics in the Market Access section of the USDEC website for a sample letter). In most cases COFEPRIS will grant the requested extension as long as the requestor provides justification for the delay. If an importer applies for an extension and does not receive a response by June 30, the company should include a copy of the request with its regular import documents, in case COFEPRIS staff at border entry points asks for the new labels.
  • COFEPRIS does not intend to stop shipments at the border if they do not comply with the new FOP label icons, but the agency encourages importers to complete their new labels as soon as possible and to request an extension should one be desired. COFEPRIS also confirmed that stickers are allowed and that the FOP icons may be added to the labels after the goods are imported into Mexico (at the importer's warehouse, for example) but before the product is sold. In this scenario, importers should present a copy of the sticker and examples of final label with the FOP icons when the company presents the import documents to COFEPRIS staff at border crossing points.
  • COFEPRIS encourages all importers to obtain a constancia from a verification unit approved by Mexico’s Secretaría de Economia to ensure their labels comply with Mexican regulations. See the Mexico entry in Volume 2 of the USDEC Export Guide for a list of agencies that issue constancias. See the Mexico link in Volume 3 of the Export Guide for the complete FOP regulations. (USDEC staff)

Walmart Asia CEO speaks out in support of TPA, TPP
Echoing comments he made at the USDEC Spring Board of Directors and Membership Meeting (see Global Dairy eBrief, 4/3/15), Walmart Asia CEO Scott Price spoke of the critical need for Congress to pass Trade Promotion Authority (TPA) and for the United States to wrap up negotiations on a high-standard Trans-Pacific Partnership (TPP) agreement. In an editorial for Fox News, Price detailed how high tariffs disproportionately impact trade in the everyday goods that consumers need the most, including food. Using Japan as an example, he cited Walmart research that found the average Japanese consumer could save $320 per year if Japan provided full market access for dairy, meat, rice and produce in TPP.

“Opening these markets is not just good for our customers, it’s vitally important for our suppliers, many of whom are looking overseas to find new products,” Price said. “TPP will better position U.S. farmers, ranchers and food processors to take full advantage of rapidly expanding consumer markets.”

And TPA is “critical” if we want to complete deal like TPP, he added. (FoxNews.com, 4/30/15)

Greece threatens no vote on CETA without stricter feta protection
Greece is threatening not to endorse the EU-Canada Comprehensive Economic and Trade Agreement (CETA) unless the deal is revised to prevent Canadian cheesemakers from using the name “feta.” The agreement currently allows Canadian companies making feta before October 2013 to continue using the name. Greece wants significantly stronger restrictions on Canadian cheesemakers, including those making feta before October 2013. How far the Greek government is willing to go to achieve its goal is unknown and the ramifications of Greece failing to endorse the deal are unclear. (Reuters, 5/5/15)

Treasury issues Cuba travel guidance document, FAQ
The U.S. Department of the Treasury released a new guidance document for travel between the United States and Cuba and a new 14-page FAQ on the Cuba embargo and the evolving U.S.-Cuba relationship. To access the documents, visit Treasury’s Cuba Sanctions page. For more on developing U.S. dairy opportunities in Cuba, read Vikki Nicholson’s U.S. Dairy Exporter Blog post recounting her March trip to the island as part of the U.S. Agriculture Coalition to Cuba delegation.

 

Market Conditions

GDT falls 3.5 percent
The GlobalDairyTrade (GDT) Price Index declined for the fourth auction in a row on May 5, with the average winning price dropping 3.5 percent to US$2,515/ton—about the same as it was at the start of December 2014. The decline was expected, given that market sentiment softened over the past two weeks as Fonterra Co-operative Group reduced its payout forecast, lifted its 2014/15 milk collection estimate (see Global Dairy eBrief, 4/30/15) and increased GDT volumes on offer for SMP and AMF.

All traded products except cheddar (+9.1 percent to an average winning price of US$3,012/ton) lost ground. WMP slipped 1.8 percent to US$2,386/ton, SMP fell 7.5 percent to US$2,253/ton, AMF dropped 6.3 percent to US$3,505/ton, butter declined 0.8 percent to US$3,026/ton, buttermilk powder plunged 14 percent to US$1,748/ton, and casein dove 11 percent to US$6.094/ton.

Looking ahead, the GDT forward curve flattened, suggesting eventual price recovery would remain gradual. (USDEC staff; GDT; BusinessDesk, 5/6/15)

 

Market Access

Barbados recognizes U.S. certification authorities
Barbados authorities officially recognized the U.S. authorities responsible for dairy certification, a development two years in the making that should eliminate instances of U.S. product being detained or rejected at the border. The AMS sanitary certificate must accompany all U.S.-origin dairy products. For questions, please contact Sandra Benson at sbenson@usdec.org. (USDEC staff; USDA)

 

Company News

Midfield project gains regulatory approval
Australian meat processor Midfield Group gained regulatory approval to build an A$60 million (about US$47 million) milk powder facility adjacent to its meat plant in Warrnambool, Victoria. Just last week, Midfield announced plans to turn a former potato plant in Penola, South Australia, into a milk powder manufacturing site, also at a cost of A$60 million. The “almost identical” plants would take in about 165,000 tons of raw milk per year each, with output targeted at export markets in Asia. Midfield produces about 45,000 tons of milk through its current operations but is in the market for additional volume.

The company hopes to complete the Penola facility by mid-to-late 2016. It said it would not start construction on the Warrnambool site (which has faced considerable local opposition) until after Penola was up and running. (ABC Rural, 5/5/15; The Weekly Times, 5/5/15; Beef Central, 4/30/15)

Mergers and acquisitions
Turkish food giant Yildiz Holdings sold its Ak Gida dairy business to Lactalis. At press time, Yildiz had not revealed the sale price. Ak Gida posted sales of more than $750 million last year, including $31 million in exports, primarily to the Middle East . . . Kenya’s Brookside Dairy paid $37 million for major Ugandan dairy manufacturer Sameer Agriculture and Livestock . . . H.J. Heinz sold its infant formula and cereal manufacturing plant in Kendal, UK, to a new pharmaceutical research firm called Kendal Nutricare. The company will contract manufacture infant formula (including Heinz brands) and other products . . . China’s Shanghai Pengxin continues to build its stable of New Zealand dairy farms. Through its Hunan Dakang Pasture Farming subsidiary, it paid NZ$43 million for a group of 10 North Island farms milking 3,900 cows. The deal is subject to regulatory approval . . . Masan Nutri-Science became the largest pig feed player and second largest overall feed company in Vietnam by acquiring Sam Kim Co., the parent company of Vietnam Cattle Feed JSC (Proconco) and Agro Nutrition Co. (Anco). (USDEC Vietnam office; Company reports; Today’s Zaman, 5/5/15; Dairy Trader, 5/5/15; The Star (Kenya), 5/1/15; The Westmorland Gazette, 5/1/15)

Company news briefs
Glanbia Ingredients Ireland officially opened a €17 million expansion to its Ballyragget butter facility. The plant increases Glanbia’s annual butter output from 55,000 tons to 80,000 tons . . . Egyptian bakery Edita Food Industries expanded its licensing agreement with Hostess Brands to cover 12 additional countries in the Middle East and North Africa. (Edita acquired the rights to manufacture Hostess snack cake products for Egypt, Jordan, Libya and Palestine in 2013) . . . Troubled UK dairy co-op First Milk implemented a turnaround plan consisting of cutting costs, revising its milk pricing strategy and refocusing the business on core UK customers. (USDEC Middle East office; Irish Independent, 5/2/15; The Scottish Farmer, 5/1/15)