Cheese Exports Hit Record High
Overseas cheese importers appeared unfazed by rising U.S. spot prices in June, as U.S. exports soared to a record-high 84.7 million pounds for the month. A dramatic recovery in Mexican demand contributed to the increase, with shipments to Mexico totaling 25.7 million pounds, the largest volume in two years. But Mexico was not the only importer of U.S. cheese in June. After hitting a record in May, U.S. cheese exports to South Korea retreated slightly in June to 19.9 million pounds but still remain well above historical norms. However, much of June’s export volume likely reflected deals booked in prior weeks when U.S. cheese was still relatively price competitive on the international market.
Rejuvenated Mexican demand for milk powder also supported strong U.S. exports of nonfat dry milk (NDM) in June. Total U.S. NDM exports were 167.2 million pounds for the month, down slightly from May’s record-breaking figure but 77.3% higher than in the same month last year. Even though the 59.4 million pounds of NDM exported to Mexico represented an increase of 12.9% year over year, it was not enough to overcome the deficit seen in earlier months. Cumulative NDM exports to Mexico trail the prior year by 16.6%. NDM exports to the Philippines, Indonesia, and Vietnam all declined vs. the prior month but remain well above 2019 on a year-to-date basis.
A weakening U.S. dollar should support the competitiveness of U.S. dairy product exports in coming weeks. However, an economic hangover from the pandemic and renewed concerns about the virus’ resurgence are dampening the outlook.
Cheese prices continued their dramatic descent in today’s CME spot session. Cheddar blocks gave up 11.5¢, falling to $1.815/lb., the lowest price since mid-May. In just one week, block prices have fallen by more than 20%. Barrel prices followed suit, giving up 17.25¢ to close at $1.6425/lb. with nine trades. After falling 15.5¢ yesterday on 25 trades, spot butter boomeranged 11.5¢ today to close at $1.54/lb.