US Cheese Exports Make Strong Gains

Volume 131, No. 15, Friday, October 13, 2006

The outlook for US cheese exports has been enhanced recently by a number of factors. Expanding demand for cheese from customers in Latin America and East Asia, and shopping in modern grocery stores and at fast food restaurants in many countries contributed to rising exports of US cheese. 

The US is a supplier of a wide range of cheese products, and importers in other countries can find the product they need here. The EU is the leading world producer and exporter of cheese, but its output was relatively flat in the last several years. 
In contrast, US cheese production has been increasing, particularly in western states. 

Exports of cheese from the US increased 27 percent to 40,108 tons during January-July 2006 (early 2006), and the value rose 23.7 percent to $134.8 million. The rebound in early 2006 followed a 6 percent decline to 57,760 tons in 2005, when higher prices lifted the value slightly to $202 million.

Latin America Is Key Market
Some of the best prospects for growth in US cheese exports are found in Latin America. More fast food outlets are opening each year, and supermarkets with modern facilities are expanding business in many countries. 

US exports of cheese to Latin America increased from 23,481 tons in 2003 to a peak of 29,256 tons in 2004, before declining to 26,034 tons in 2005. Then shipments rose 40.4 percent to 19,557 tons valued at $63 million in the first seven months of 2006. This indicates that US cheese exports to Latin America during calendar 2006 might increase to a range of 33,500 tons.

Mexico is a growing market for many US agricultural commodities with the help of free trade arrangements made through NAFTA. US exports of cheese to Mexico increased 42.6 percent to 13,271 tons during January-July 2006, valued at 43.4 million. This was a rebound following the 18.1 percent decline for cheese shipments to Mexico in calendar 2005 to 17,511 tons, valued at $60.2 million. 

Mexico imports cheese from some other countries in Latin America, EU, Canada, and New Zealand. Delivered prices for US cheese purchased by customers in Mexico were apparently attractive during early
2006.

The average price for US cheese exports to Mexico declinced to $3,270.54 per ton during January-July 2006, compared with $3,393.10 in the comparable months of 2005. Prices for cheese delivered by some other countries apparently increased, especially those from some EU exporters. 

The rising conversion rate of the euro to a range of $1.26 to $1.30 tended to make the delivered price for Mexican importers more costly in early 2006
US cheese exports to Guatemala, El Salvador, and Honduras increased sharply in early 2006, while shipments to Nicaragua were relatively flat. Exports to Panama and Costa Rica declined, partly because of strong competition from exporters from Europe and South America.

Exports of US cheese to El Salvador increased 67 percent to 182 tons in the first seven months of 2006, valued at $586,000. Shipments to Guatemala rose 90.3 percent during this period to 319 tons. US cheese exports to Honduras in early 2006 increase 51 percent to 591 tons, valued at $1.5 million. 

Panama Canal is a busy place with so many more ships passing through with cargo from Asia destined for ports in eastern US, Canada, and the eastern half of South America. Location on the path of so much trade activity may contribute to greater contact by traders in Panama with cheese exporters from many countries. US cheese exports to Panama declined 22.8 percent in early 2006 to 541 tons.

Costa Rica was a market for 77 tons of US cheese in early 2006 – a fourth less than during the first seven months of 2005. US cheese exports to Costa Rica declined from 340 tons in 2003 to 199 tons in 2005.

Colombia was a market for 298 tons of US cheese valued at $864,000 in January-July 2006, compared with shipments of 87 tons for $227,000 in the comparable months of 2005. The deliveries to Colombia in early 2006 were already above US cheese exports of 195 tons for all calendar 2005, and the peak shipments of 243 tons in 2004. Expanding sales of fast food outlets and supermarkets in cities of Colombia contributed to the rise in demand so far in 2006.

Lima has some modern supermarkets with cheese from many countries. Competition apparently contributed to the 9.6 percent decline for US cheese exports to Peru in early 2006 to 443 tons. US cheese exports to Peru drifted lower from a peak of 740 tons in 2003 to 361 tons by 2005.

Chile has free trade arrangements with Argentina, Uruguay, Paraguay,and Brazil. Argentina and Uruguay increased deliveries of cheese to Chile in recent years. US exports of cheese to Chile declined 9.5 percent in early 2006 to 325 tons. US cheese shipments to Chile declined from a peak of 691 tons in 2004 to 584 tons in 2005.

Guyana has had good gains for exports of some agricultural commodities in recent years, especially for rice. US exports of cheese to Guyana more than doubled in early 2006 reaching 79 tons, valued at $192,000. 

US cheese exports to Guyana showed a strong upward trend from 10 tons in 2001 to 56 tons in 2005. It now appears likely that shipments for calendar 2006 may be about 12 times the level reported in 2001.

US exports of cheese to Dominican Republic reached 870 tons in January-July 2006, valued at $2.8 million — double the level for comparable months of 2005. Some of the increased demand was apparently spurred by a reduction for average price for shipments to $3,228.74 per ton in January-July 2006, compared with $4,105.88 per ton in the comparable months of 2005. 

Cheese Exports To Asia Mixed
US exports of cheese to South Korea increased 29.7 percent in early 2006 to 4,280 tons, valued at $13.6 million. The value for US cheese exports to South Korea reached $22.5 million in 2005 – double the $11.7 million reported for 2003. 

The recent free trade agreement with the Republic of Korea is expected to encourage strong gains for US exports of consumer items to this market, including cheese.

Japan imports cheese from many suppliers, including large deliveries from New Zealand, Australia, and EU. US exports of cheese to Japan declined 7.8 percent in January-July 2006 to 4,484 tons, valued at $$17.5 million.

China has been buying much larger quantities of some US agricultural commodities in 2006, apparently as effort gains momentum to limit the rising trade gap. China exports over $200 billion more in goods to the US than the value of purchases here. US exports of cheese to China zoomed from 21 tons in January-July 2005 to 782 tons for a value of $1.7 million in the comparable months of 2006.

Indonesia had record exports in the recent year, mostly because of high petroleum prices. New shopping malls in Jakarta and some other cities included the latest design for grocery store facilities. US exports of cheese to Indonesia increased from only 5 tons in January-July 2005 to 434 tons valued at $1.7 million in the comparable months of 2006.

Greater Exports To EU, Canada
Trade among EU members in cheese increased in recent years, and imports from external suppliers drifted downward. US exports of cheese to the EU declined from 3,376 tons in 2002 to 1,905 tons in 2005.

US cheese exports to the 25 countries of the EU combined increased 15.6 percent in January-July 2006 to 1,174 tons, valued at $2.7 million. Shipments to Belgium rose 18 percent to 621 tons. Exports to the Netherlands were up 22.9 percent o 437 tons. US cheese exports to the Netherlands drifted downward from 1,153 tons in 2002 to 777 tons by 2005.

US cheese exports to France were down 34.4 percent to 53 tons in early 2006. US cheese shipments to the United Kingdom increased a sixth in early 2006 to 398 tons. The quantity of U.S. cheese exported to the UK dropped by half from 1,248 tons in 2002 to 607 tons in 2005.

Canada was a market for 4,361 tons of US cheese in early 2006 – 2.4 percent above the level for the first seven months of 2005. US cheese exports to Canada reached a peak of 8,264 tons in 2005 – 38.5 percent above the 5,968 tons shipped in 2004. US cheese deliveries to Canada are usually less costly than those from Europe.

Egypt, Qatar Buy More US Cheese
US cheese exports to Egypt increased from 47 tons in January-July 2005 to 131 tons in the comparable months of 2006. Egypt’s total cheese imports increased recently from Europe. 

Iraq has apparently been importing more cheese recently from Europe and New Zealand. However, purchases of US cheese have been absent since 323 tons were shipped through food aid in 2003. 

The lack of feed grain imports has left Iraq without the ingredients to rebuild its commercial dairy industry to the level attained by 1990. A major source of cattle feed for Iraq is Syria. Imports of about 1 million tons of corn annually by Syria from the US and Ukraine allows Syria to have large output of animal feed, with significant exports to Iraq.

US exports of cheese to Qatar increased from 27 tons in the first seven months of 2005 to 114 tons in the comparable months of 2006. Great wealth from petroleum and natural gas exports has contributed to more projects and rapid economic growth for Qatar.

Competition from European suppliers made it difficult to expand US cheese exports to UAE in early 2006, but deliveries did rise 0.5 percent to 277 tons.

Tunisia opened as a market for 182 tons of US cheese in early 2006. •


John B. Parker was formerly an international economist with the Economic Research Service of the US Department of Agriculture

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