Just been a bit busy whilst quietly I've been watching over the site. That said, sometimes the lack of communication might need a little kicker. They are not beholden to having to update every single movement in behaviour but once they have whetted the appetite, then they need to keep it fed. Right now, they are entering the zone of where they should be updating the market (or where they could safely consider updating the market on recent trading performance) rather than in either rushing our or erratically preparing an investor update with too many "gunna dun dis".
For starters, the market out there despite all the MGB, Fonterra and other processor gyrations, is still favourable. Export is strong and growing, and domestic is solid and stable. The only real problem is in sometimes either having to take, or in assuming, that the world price (meaning the subsidised EU price) will prevail. In some areas, this might seem to be impacting but not in others.
Late this morning, the Mar 2016 dairy export report came out late this morning, the following of which summarises my take on it.
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The latest dairy export reports have just been published for March 2016. What they show is very much of interest because in the 9 months to March:
MILK value exports are up 14.2% to $172
CHEESE value exports (including Cheddar are up 8.1% to $629M although this was led by a 10.2% increase in the value of OTHER CHESSE (ex-CHEDDAR) exports which rose from $385M in 9MF15 to $423M in the 9M to March 2016
BUTTER OIL value exports rose by 26% but off a low base of $23.7M rising to $29.9M in the review period.
BUTTER value exports however dropped significantly, reflective in part on the European contagion. BUTTER value exports fell from $118M in 9MF15 to $78M in 9MF16, down 34.5% YoY.
MIXTURES rose in value(+7.9%) from $268M to $290M whilst OTHER DAIRY PRODUCTS similarly rose by 7.3% from $111M to $119M.
For completeness, OTHER DAIRY PRODUCTS included à Other dairy products include casein, lactose, condensed milk, ice cream, yogurt, buttermilk powder and milk protein concentrates
In the POWDER AND EXTRACTS area, mixed performances were turned in.
The value of WHEY RPODUCTS’ exports fell by 34.8% from $89M to $58M.
As also did SMP value exports which fell by 20.9% from $521M to $412M.
Countering this however was the significant jump in WMP value exports which shot up from $254M to $416M, for a 63.4% YoY comparative improvement.
OVERALL, in the 9MF16 period, the total value of our DAIRY EXPORTS was 4% higher, YoY, coming in at $2.2B compared to $2.12B through to the 9MF15 mark.
What however is of interest is in terms of the tonnage being moved through to export and the prices that have been achieved to date.
For example, in the 9MF16 period, MILK tonnage rose 15.2% to 134,376 tonnes, at an average price of $1,283/t. This compared to the comparative 9MF15 average price of $1,295. So, relatively stable, YoY.
SMP tonnage in comparison was 144,219t, up 5.2% YoY. In pricing terms however, the 2016 average YTD price has been $2,855 compared to the 2015 comparative average of $3,800, down 25% YoY in comparative pricing terms.
The story for WMP is similar, with 2016 tonnage virtually flat at 54,481t (F15 = 54,492t), resulting in average pricing of $4,670 in F15, compared to $7,630 in F16, up >63% in YoY terms.
Overall, tonnage for the 9MF16 period was up 5.9% whilst the corresponding value was up 4%. So, whilst there has been a frenzied movement into the powdered milk market the fact remains that the comparative export volume trend movements have been quite limited, with tonnage across SMP, WMP and WHEY products up a collective 2,000t YoY for however an increased value of +$21M, up from $864M (9MF15) to $885M (9MF16).
Considered in another way, the tonnage movement etc does not yet seem to support any significant export redirection to date which therefore tends to reinforce the re-directed domestic sale of dairy products (particularly in the powdered segments) which subsequently have been taken /personally exported overseas.
In contrast, the biggest volume mover has been milk, up from 116,611t in 2015 to 134,376t in 2016, at a comparative value of $151M in 2015 compared to $172.4M in 2016. So, milk is driving the dairy export volume changes whilst the powder segments (particularly WMP) are driving the changing pricing equation.
The continuing reach and penetration of milk in the export market is good for CDC /AHF as is the movement in the CHEESE and OTHER DAIRY PRODUCTS’ market segments whilst the continuing POWDER impact is not impacting, or at risk of impacting, against AHF.
(20min delay)