The forecast for livestock, poultry and dairy exports is lowered by US$2.2b to US$28.2b, largely due to depressed prices for beef and pork due to excess supply. Dairy exports are forecast at US$5.6b, down US$2m from the August forecast. However, at US$5.6b, this is flat from the agricultural export value achieved in 2015. Global supply of dairy product is high, while prices are generally weak. US production of milk, and therefore dairy products, has seen flat growth rates recently – much of the global over-supply is driven by Europe. The exception in the US is butter, which continues to demand prices of more than double what butter is achieving elsewhere in the world.
Mexico is the largest market for US dairy, as well as a significant market for a number of other agricultural products, including poultry, beef and pork – export values for these products are all expected to be down in this market. The forecast for all agricultural exports to Mexico has been reduced to US$18b, a decline of US$0.5b.
The export forecast for product going to China is US$18.2b, a decline of US$2.3b. Chinese demand has been lowered for a number of months now, due to high stocks. There has been some noise in the market that dairy stocks have now flattened out, so demand should pick back up, though we are yet to see an increase in Chinese buying activity for dairy product.
The forecast for US imports of dairy has been maintained at US$3.5b, which is in line with 2015. US$1.4b of this is expected to be cheese.
The USDA is forecasting an increase of US$500 million from 2015 for imports of agricultural product (including non-dairy) from New Zealand, to a total of US$3.5b. However, NZ holds just 2.6% of the US market for agricultural imports.
