April 12, 2021
The United States exported over 7.6 million pounds of butter in February, which was 117% more than February 2020, adjusted for leap day. These are the biggest February butter export numbers since 2014, and this marked the third consecutive month that the U.S. was a net exporter of butter.
Canada was the biggest market for butter, with the U.S. shipping 2.35 million pounds to its northern neighbor, a 65% increase year-over-year. Almost two million pounds of butter were exported to Egypt, which had not bought significant quantities of U.S. butter since late 2017. However, butter exports to Mexico, one of the top three dairy export markets for the U.S., totaled almost 440,000 lbs, down 23% from the previous February. U.S. butter prices have been at a discount to world butter prices since the second half of 2020. The gap widened significantly to $0.35/lb. in November and December 2020, when February exports were likely booked. The chasm continued to grow in early 2021, with U.S. prices as much as $0.84/lb. below world prices, according to CLAL data. This suggests that U.S. butter exports may remain strong in the coming months as importers take advantage of cheap U.S. butter.
After accounting for leap day, February cheese exports were up a marginal 0.8%, equaling close to 67 million pounds. For the six month in a row, exports to Mexico, the number one destination for U.S. cheese, declined on a year-over-year basis, totaling almost 19 million pounds, a drop of 7.4%, relative to February 2020. The cheese export story is similar to butter’s story, though, as other key export markets such as Canada, South Korea, and Japan all increased cheese purchases in February.
The tale to be told, perhaps, is that economic disparities remain as Covid-19 concerns wane in some nations. Asian and developed economies appear to have managed the impacts of shutdowns and vaccination distribution and are returning to normal quickly. Spot markets rallied today, driven by reports of increased demand. Butter closed above $1.90 for the first time since June 2020.