Average Cheese Export Prices Dropped Significantly In First Half Of 2009

Volume 134, No. 27, Friday, January 1, 2009

Changes in the average price for cheese exports from some major traders in early 2009 were almost like a tornado hitting a town. The average export price for cheese entering world trade declined during January-July 2009.

The pace of decline for New Zealand was 37.5 percent, down to $1.46 per pound, compared with $2.34 per pound in 2008. That placed New Zealand as the least costly major supplier of cheese to the world market in early 2009.

In 2008, a surprise to some, the lowest average price for cheese among major world exporters of this product was the United States, with an average export price of $2.16 per pound. Since the price was so low in 2008, the average price for US cheese exports declined less than other major exporters in early 2009 by 6.6 percent to $2.02 per pound.

Managers of cheese import activities in some developing countries have computers to watch changes in prices offered by cheese exporters in a number of countries.

Since the average price for Colby cheese from New Zealand in early 2009 was about a fourth below the average for a combination of various types of cheese from the US, many increased purchased from New Zealand. Australia and Argentina also bolstered cheese exports with lower prices in early 2009.

The reduced price allowed New Zealand’s share of cheese exported from eight major world cheese exporters to rise to about 23 percent, compared with less than 20 percent of the total exports from this group of countries in 2008. New Zealand’s total cheese exports were valued at $1.12 billion in 2008, and they were at the annual pace of $1 billion during the first seven months of 2009.

The US accounted for 10.5 percent of the cheese exported from eight major exporters in 2008, but during the first seven months of 2009 the US share dropped to just over 8 percent. Thus some analysts might interpret the big rise for New Zealand’s exports as one of the reasons for the decline of about a fourth for US cheese exports in early 2009.

EU Cheese Export Share Falls
The 27 countries belonging to the European Union have a large share of world cheese output, and trade among member countries is reported separately from data on exports to countries outside their common market.

The EU 27 external exports provided nearly 44 percent of cheese exported from the eight major exporters in 2008, but their share for cheese exports in early 2009 was about 1 percent less.

Cheese exporters in EU countries are busy trading with each other. When Denmark faced a serious loss of cheese exports to the Middle East in recent years, gains for shipments to other EU countries were enough of a lift to keep Danish cheese exports steady at over 52,000 tons annually. The new EU 12 have become larger importers of cheese from the earlier EU 15.

The average price for exterior exports of cheese from the EU 27 dropped from $3.50 per pound in 2008 to $2.88 per pound in January-July 2009.

Some types of cheese from EU countries sold to the US have a relatively high price. The price for Gouda cheese from Netherlands in US stores is usually double that level, and some cheese from Italy is over seven times the average EU exterior price.

The average price for Australian exports of 138,979 tons of cheese for $783.5 million in 2008 was $2.49 per pound, and in early 2009 it was down to $1.76 per pound. Australia is a major supplier of cheese for importers in Japan, South Korea, and some Middle East countries.

Better weather and rising exports may allow Australian cheese exports to approach $1 billion in 2009. Sales of Cheddar cheese from Australia have a lower retail price in some US stores than most other types of cheese displayed.

Argentina’s Price Attractive
Attractive Argentine prices contributed to a faster pace for exports in early 2009. The average price for Argentine cheese exports declined from $2.43 per pound in 2008 to $1.54 per pound in January-July 2009. That placed Argentina next to New Zealand with the lowest average export price among the 8 exporters evaluated.

Argentina has substantial cheese exports to neighboring countries in South America, and also to Russia. Argentina’s total cheese exports of 31,868 tons in 2008 were valued at $171 million.

Some displays in US supermarkets of cheese from many suppliers have cheese from Argentina a level about half that for the average for cheese from other suppliers.

The average price for cheese exported from Switzerland declined from $5.05 per pound in 2008 to $4.88 per pound in the first seven months of 2009. From data tabulated for early 2009, it appears that the value for Swiss shipments of cheese for the year may remain near the $550 million tabulated for 2008. The US is a major destination for exports of cheese from Switzerland.

The average price for cheese exported from Norway declined from $3.33 per pound in 2008 to $3.22 in January-July 2009. Nearly half of Norway’s exports of 12,716 tons of cheese valued at $93 million in 2008 went to the US. Again, in early 2009, the US was the leading destination for cheese exported from Norway.

The average price for cheese exported from Ukraine declined from $3.04 in 2008 to $1.98 in January-July 2009. Most of the 60,135 tons of cheese exported from Ukraine valued at $402 million in 2008 went to Russia.

Despite Russia’s shift to greater imports of cheese from the EU-27 in the last several years, Ukraine was able to maintain significant deliveries to the growing Russian market for imported cheese.

Total cheese exports from Ukraine in 2009 are likely to be near the 2008 level. •

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

US Cheese Exports Make Strong Gains