Global Non-fat Dry Milk Markets Under Pressure

GLOBAL - Further analysis of February’s non-fat dry milk (NDM) trade data indicates that the US is facing increased competition in Southeast Asia, which may be forcing US exporters to shift efforts to other regions, writes Mary Ledman, Sara Dorland, Sarina Sharp and Karen Endres on 16 February 2012.
calendar icon 17 April 2012
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Year to date, the top ten export partners account for 87 per cent of US NDM/ skimmed milk powder (SMP) exports. While the top four trade partners remain consistent: Mexico, Indonesia, Philippines and Vietnam.

Exports to all but Mexico are trending lower vs. last year (see chart). Meanwhile exceptionally strong exports to Mexico and Egypt in 2012, up 56 per cent and 66 per cent respectively, have kept US NDM/SMP exports positive vs. last year.

However, more SMP may be available on the global market. Last year the Indian government banned exports of SMP and casein to ease domestic prices. In addition, India imported 50,000 tons of SMP to enhance supply. With 2012 milk production forecasted at 127 million tons, up more than 4.5 per cent vs. last year, manufacturers want the ban lifted. Indian SMP stocks are estimated near 100,000 tons or over 220 million lbs.

These stocks are currently not available to the world market; however, if the ban is lifted then a portion of these stocks would be readily available to global buyers. This suggests US NDM/ SMP exporters may experience more competition in the coming months.

CME spot Cheddar barrel trading was active today with seven trades while there was just a single bid in the block market. The CME Cheddar block and barrel prices settled unchanged at $1.4875/lb. and $1.4600/lb., respectively. CME spot butter closed today unchanged at $1.4250/lb., with one below the market bid left on the board. CME spot NDM markets were offered lower again with both settling down 1.5¢. CME Grade A NDM closed at $1.1775/lb. and extra-grade NDM settled at $1.1675/lb.

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