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Global Dairy eBrief
June 4, 2015, Volume 22, Issue 22


April U.S. dairy export volume hits 11-month high
U.S. suppliers had their best month volume-wise since June 2014, according to FAS trade data released this week. In a tough competitive market, aggregate shipments of major milk powders, cheese, butterfat, whey and lactose totaled 185,342 tons in April, up fractionally from a year ago and a gain of 5 percent from March (on a daily average basis). Suppliers set records in WPI (4,883 tons), lactose (36,174 tons) and fluid milk (8,940 kiloliters).

U.S. dairy export value fell 22 percent to $535 million (compared to April 2014), but rose 1 percent (daily average) from March 2015. Export volume and value have increased three straight months since bottoming-out in January.

Also on the plus side: April SMP volume rose 8 percent vs. the previous year to 57,400 tons, and WPC increased nearly 7 percent to 22,308 tons. Significant declines on MPC, WMP, butterfat and sweet whey offset the gains. Cheese volume was a respectable 31,656 tons but down 6 percent from last April.

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



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

Japan provides tender schedule for current access and additional volumes
Japan’s Agriculture and Livestock Industries Corp. (ALIC) held the first of seven dairy tenders slated for this month today, June 4. It was a general tender for 5,000 tons of SMP. The United States won 850 tons, the third highest total from supplying nations. New Zealand took nearly one-third of the volume, securing 1,587.6 tons. Belgium was second with 1,050 tons. Australia finished just under the United States at 846 tons. Estonia, Finland, Ireland and the Netherlands split the remainder.

Six more tenders are slated as follows:

  •          June 9: general tender for 4,400 tons of butter.
  •          June 11: SBS tender for 2,000 tons of butter.
  •          June 16: SBS tender for 1,800 tons of butter.
  •          June 23: SBS tender for 200 tons of butteroil.
  •          June 23: SBS tender for 330 tons of dairy spread.
  •          June 25: SBS tender for 1,800 tons of butter.
  •          June 30: SBS tender for 2,000 tons of whey. (USDEC Japan office)

Sign up now for chance to be part of 2016 USDEC Gulfood booth
Historically, USDEC’s booth for the Gulfood show, the Middle East’s leading exhibition for the food and hospitality sector, fills up literally seconds after registration opens. To make the process more equitable, we are implementing a new lottery system for the six USDEC booth positions for the 2016 event, which is slated for Feb. 21-25 in Dubai.

Here’s how it works: Members interested in space in the USDEC pavilion must submit a request to John Klees at no later than Friday, June 26, 2015. Two of the six spots are reserved for first-time Gulfood exhibitors. We will first randomly select from qualified “new companies” for those two spaces, then combine all entries for a random drawing for the final four spaces. USDEC will notify all companies of their status no later than June 30.

We are starting the process early this year so that companies who don’t get a USDEC booth slot will still have a chance to request a booth through the USA Pavilion when it begins taking reservations in late July or early August.

Lisbon Union opens door to EU and its GI register
Another rule change made by the Lisbon Union during its May meeting in Geneva, Switzerland (see Global Dairy eBrief, 5/21/15), will allow intergovernmental agencies, like the EU, to become members. The EU has shown interest in joining, and should it choose to do so, its entire geographical indication (GI) register, including names like asiago and feta, could be added to the Lisbon Agreement’s expanded register of protected names.

The deal will also facilitate the registration of compound names. The Consortium for Common Food Names, founded by USDEC, is pursuing clearer information on whether the treaty members intend to restrict the use of individual components of such compound names. (USDEC staff; Inside U.S. Trade, 5/28/15)

Market Access

New Zealand seeks Russian business; Russia’s next move unclear
The New Zealand government sent an envoy to Russia to open talks to remove a “temporary suspension” that has prevented 61 Kiwi dairy plants from shipping product to the Russian Federation and its Customs Union partners Belarus and Kazakhstan. Russia suspended the facilities after Fonterra’s 2013 botulism scare, and the Ukraine situation put any resolution on hold. Twenty other Kiwi plants are already eligible to ship to Russia, but the New Zealand government last year asked the nation’s dairy suppliers to abstain from exploiting opportunities created by the Russian embargo on EU dairy. With prolonged challenging market conditions, the New Zealand dairy industry has reportedly been pushing the government to act.

How receptive Russia will be to New Zealand’s efforts is unknown. The nation’s stance on dairy imports has vacillated for months, with media outlets often citing contradictory and/or improbable developments.

Recent reports claim Russian regulators have cleared four Greek dairy suppliers to begin exporting come August—the one-year anniversary of the embargo. However, news outlets have been replete with stories that Russia would soon be opening its borders to Indian, Iranian and other dairy suppliers, while at the same time imposing new tariffs on Belarus and Kazakhstan to slow the flow of dairy shipments. These reports are interlaced with stories about large quantities of counterfeit cheese on Russian retail shelves, Russian plans to extend the embargo, Russian schemes to invest heavily in domestic milk production to wean the country off imports and the poor condition of the nation’s domestic dairy sector.

Its embargo decisions at least may become clearer should the EU opt to renew economic sanctions against Russia later this month as EU officials have hinted. Russian authorities said that they would answer any decisions to extend sanctions “symmetrically.” (USDEC staff; Wall Street Journal, 6/3/15; Dairy Markets, 5/28/15;, 5/28/15)

Market Conditions

GDT declines 4.3 percent
The GlobalDairyTrade (GDT) Price Index fell 4.3 percent to US$2,412/ton, surprising many analysts who thought prices had bottomed out. Recent milk production reports out of Europe and New Zealand’s strong finish to the 2014/15 season reinforced worries of global oversupply.

The price drop was the sixth auction decline in a row. Butterfat led the market downward, but nearly all products showed weakness. Declines in the average winning prices were as follows: butter, -10 percent to US$2,619/ton; AMF, -7.4 percent to US$3,112/ton; WMP, -3.1 percent to US$2,309/ton; SMP, -1.3 percent to US$1,982/ton; buttermilk powder, -7 percent to US$1,795/ton; casein, -4.4 percent to US$5,789/ton; and lactose, -6.9 percent to US$540/ton. Cheddar price moved up to US$3,055/ton. (USDEC staff; GDT)

EU dairy farmers demand assistance
Poland’s Ministry of Agriculture joined EU farming union Copa-Cogeca in calling for the European Commission to raise dairy intervention prices. The current SMP intervention price is €1,698/ton (about US$1,871/ton), a number that Copa-Cogeca says it out of touch with current production costs. Separately, the European Milk Board called for additional crisis management tools and revived its push for some type of voluntary production controls.

EU farmgate prices reached their lowest level since 2012, causing “severe cash flow problems” for many farmers, the Copa-Cogeca said. The group asked the Commission to feed 2014/15 superlevy fines (estimated at around €700 million or US$771 million) into a fund to assist the bloc’s dairy farmers. Poland also called for “extraordinary assistance” for dairy farmers in addition to the intervention price hike.

Analysts do not expect the European Commission to meet any of the requests. (TheDairySite, 6/3/15; Farm Weekly Interactive, 6/2/15, 5/13/15; Dairy Markets, 6/1/15)

Trade Policy

Canadian dairy sector looks to build public support for supply management
Dairy Farmers of Canada launched a publicity campaign to build public support for supply management as pressure rises for a Canada to make commercially meaningful market access offers in Trans-Pacific Partnership (TPP) talks. The campaign, called the “Milkle-Down Effect,” plans to highlight specific economic and social benefits that the group says stem from milk supply management. Since the start of the year, both supply management reformers and supporters in Canada have accelerated their rhetoric as TPP momentum has grown.

U.S. Ag Secretary Tom Vilsack has suggested on multiple occasions that Canada may be left out of TPP if it continued to refuse to enter into negotiations on agriculture with the United State. Regarding Canada’s reluctance to negotiate, Vilsack told a congressional hearing last year, “Candidly, I think it’s ill-advised and it’s unfortunate. And it may very well be that if that attitude persists, that you could find an agreement that does exclude a country, but I don’t believe at the end of the day it will be Japan.” (USDEC staff; Dairy Farmers of Canada; Feedstuffs, 12/10/14)

Survey sees shift in public attitudes toward FTAs
A Pew Research Center poll showed a significant improvement in Americans’ views of free trade deals. In a new survey this year, 58 percent of respondents said they believed trade agreements were good for the United States vs. 48 percent in 2011. Forty-three percent said trade deals positively impacted their finances vs. 26 percent in 2011. Although the majority still felt FTAs had a negative effect on wages and jobs, the numbers are improving there as well.

Such a long-term shift in perception is encouraging, however, the short-term trend is less so. An Ipsos Poll conducted for Reuters indicates slowly eroding support for FTAs from January to May of 2015. While a majority of those surveyed still support the notion of FTAs, the percentage of those in favor fell from 59 percent to 56 percent since the start of the year. (Pew Research Center; Ipsos)


Port hiccups expected as management, dockworkers implement new contract
Even though West Coast dockworkers officially approved the new contract agreement reached earlier this year (see Global Dairy eBrief, 2/26/15), experts say shippers can still expect intermittent port delays. Uncertainties in interpreting the new contract and subsequent dispute settlement procedures will lead to temporary work stoppages, a situation that could drag on for awhile. Questions about chassis inspections slowed operations this week at multiple ports. (Journal of Commerce, 6/1/15)

Company News

Fonterra launches overall business review
Fonterra Co-operative Group hired local and international consultants to conduct an in-depth, company-wide business review aimed at developing strategies to upgrade efficiency, improve agility and lower costs. New Zealand media is reporting that job cuts are inevitable.

Fonterra members have been questioning the co-op’s performance and business fundamentals after this year’s poor payout and projections for a near repeat in 2015/16. Farmers have asked for greater transparency in farmgate pricing and more straightforward communications from management. Some have questioned the co-op’s debt levels and wondered whether the business has the capital to build a value-added consumer goods company.

Fonterra said it would share progress on the review at the co-op’s November annual meeting. (, 6/1/15; Dairy Trader, 5/31/15)

Mergers and acquisitions
France’s Bel Group acquired a majority stake in Morocco’s third largest dairy processor Safilait, whose fluid and fresh product lines complement Bel’s leading position in the Moroccan cheese market . . . Chinese ag producer Xibu Muye paid $15 million for Yili Group’s subsidiary in Shihezi in the Xinjiang region . . . Vietnam’s Vinamilk has reportedly set aside $380 million to fund international acquisitions. The company is rumored to be looking in Europe and the Middle East. (USDEC China office; Company reports; Nikkei Asian Review, 5/28/15)

Company news briefs
A joint public/private partnership gave the green light to the building of an NZ$26.5 million dairy research and innovation hub in central Southland, New Zealand. The facility, set for completion in mid 2016, will run about 800 cows and serve as a regional farming R&D center . . . Over the next two years, Synlait Milk is spending NZ$250 million (about US$275 million) to add an additional dryer to its Dunsandel, Canterbury, plant, lifting total plant capacity for all products to 140,000 tons per year . . . Illinois-based Lifeway Foods will begin selling its Kefir and other products in Mexico through a distribution deal with Baja Food Service and Intimidea. (Southland Times, 6/2/15; Drinks Business Review, 6/1/15; Dairy Trader, 5/30/15)

From the U.S. Dairy Exporter Blog