Key U.S. markets—Mexico (+6%), China/Hong Kong (+16%), Canada (+11%), Japan (+3%), South Korea (+2%) and the Middle East/North Africa (+16%)—all boosted their U.S. purchases. Only Southeast Asia (-4%) declined among major U.S. customers.
Second half softness
Despite the positive overall advancement, the second half of 2012 illustrated a marked difference from the first. U.S. export volumes grew nearly 8% January-June, compared to the same period the previous year, but declined 2% July-December. And aggregate U.S. export volume in the second half was 9% lower than shipments in the first half.
"Our export softness in the second half primarily stems from unfavorable pricing shifts," says Suber.
In the first half of 2012, near-perfect weather and strong returns for dairy farmers in major export regions triggered record milk production, pushing global prices about 20% lower, on average, than the previous year. When the U.S. drought hit, domestic supply concerns sent U.S. prices, which had been tracking closely with Oceania, sharply higher.
Meanwhile, world demand held strong. Shipments from the world's top five exporters (Argentina, Australia, the European Union, New Zealand and the United States) for July-December 2012 grew about 9%. But Oceania suppliers picked up share of this growing trade at the expense of the United States.
"The underlying fundamentals behind rising global dairy consumption remain, but a cyclical price rise in the United States reined in U.S. supplier growth in the second half," says Suber.
Pricing difficulties notwithstanding, there are positives in U.S. suppliers' second-half numbers.
"The fact that U.S. exports did not plummet, as they did following the 2008 financial crisis, supports the contention that U.S. suppliers are maturing in their approach to the export market," says Suber. "The overall U.S. performance reflects a greater industry-wide move towards exports as a strategic growth path."