Global Dairy Market Outlook - Farm Office

Managed by Dairy Management Inc.™

Global Dairy Market OutlookU.S. Dairy Export Council

U.S. DAIRY EXPORT COUNCIL 2

2020: Year of Volatility

U.S. DAIRY EXPORT COUNCIL 3

Volatility Certainly Applied to U.S. Dairy Pricing

$1,000

$2,000

$3,000

$4,000

$5,000

$6,000

$7,000

2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

U.S. Product Prices

Cheddar: Block/Barrel Avg NFDM Butter - 80%

Source: USDEC, Understanding Data & Markets

U.S. DAIRY EXPORT COUNCIL 4

But Less So on World Market

$1,000

$1,500

$2,000

$2,500

$3,000

$3,500

$4,000

$4,500

$5,000

$5,500

$6,000

2015 2016 2017 2018 2019 2020

USD

/MT

World Benchmark Prices

Gouda - EU SMP - EEX Butter - GDT WMP - GDT

Source: USDEC, Understanding Data & Markets

U.S. DAIRY EXPORT COUNCIL 5

Global Demand Steady to Accelerating

Source: USDEC, Trade Data Monitor

U.S. DAIRY EXPORT COUNCIL 6

China, MENA Driving Growth

-100,000

-50,000

0

50,000

100,000

150,000

200,000

China MENA CIS SEA Oceania Japan+Korea SSA LatAm (excl.MX)

Mexico Other

MT

YOY Change in Dairy Trade by Destination (Jan-Aug 2020)

Source: USDEC, Trade Data Monitor

U.S. DAIRY EXPORT COUNCIL 7

2/3 of China’s Growth is Due to Whey Recovery

Source: USDEC, Trade Data Monitor

U.S. DAIRY EXPORT COUNCIL 8

But Even Excluding Whey to China – Int’l Demand Has Been Good

0.0%

5.0%

10.0%

15.0%

20.0%

25.0%

30.0%

0

25,000

50,000

75,000

100,000

125,000

150,000

SMP Cheese WMP Whey - 0404.10 Butterfat Lactose MPC WPC80+

2020 YTD YOY Change in Global Trade by Product(Jan-Aug)

YTD Volume Change YTD % Change

Source: USDEC, Trade Data Monitor

Where Do We Go From Here?

U.S. DAIRY EXPORT COUNCIL 10

More Milk Inbound From Major Players

-1.0%

-0.5%

0.0%

0.5%

1.0%

1.5%

2.0%

2.5%

3.0%

-2,000

-1,000

0

1,000

2,000

3,000

4,000

5,000

6,000

H1 '17 H2 '17 H1 '18 H2 '18 H1 '19 H2 '19 H1 '20 H2 '20f H1 '21f H2 '21f

YOY Change in Milk Production Among Major Exporters

U.S. EU27+UK NZ Aus Arg Bel Big 6 (RHS)

Source: USDEC, Understanding Data & Markets

U.S. DAIRY EXPORT COUNCIL 11

Regions to Watch: 4 Key Questions

U.S. DAIRY EXPORT COUNCIL 12

What is China’s Milk Powder Appetite?

Source: USDEC, Trade Data Monitor

U.S. DAIRY EXPORT COUNCIL 13

What Should We Make of MENA’s Resurgence?

Source: USDEC, Trade Data Monitor

U.S. DAIRY EXPORT COUNCIL 14

Will U.S. Remain Preferred SMP Supplier to SEA?

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

50%

2015 2016 2017 2018 2019 2020

SEA NFDM/SMP Market Share by Supplier

USA EU NZ Other

Source: USDEC, Trade Data Monitor

U.S. DAIRY EXPORT COUNCIL 15

What is the State of Mexican Demand in 2021?

Source: USDEC, Trade Data Monitor

Wildcards

U.S. DAIRY EXPORT COUNCIL 17

U.S. Cheese Priced Well Above World Markets

$2,000

$2,500

$3,000

$3,500

$4,000

$4,500

$5,000

$5,500

$6,000

2016 2017 2018 2019 2020

USD

/MT

Cheese Price Comparison

Cheddar - US Cheddar - GDT Cheddar - EU

Source: USDEC, Understanding Data & Markets

U.S. DAIRY EXPORT COUNCIL 18

Brexit: Impact on Dairy Markets

U.S. DAIRY EXPORT COUNCIL 19

India to Subsidize SMP Exports (est. 20K+ MT)

U.S. DAIRY EXPORT COUNCIL 20

Covid-19 and the Economic Implications

Source: New York Times, Nov 12, 2020

U.S. DAIRY EXPORT COUNCIL 21

Thank You & Questions

William [email protected]