Reduced volume and softer prices are behind a drop in cheese export value. Photo / 123RF
Reduced volume and softer prices are behind a drop in cheese export value. Photo / 123RF
The value of New Zealand’s cheese exports took a tumble in the first quarter of this year as the United States dairy sector trumpets a record run of cheese exporting.
Industry trade data shows the value of New Zealand cheese exports in the March quarter was $627 million, well downon $786.6m recorded in the same period in 2023. The value in Q1 2022 was $644m. Volumes in the 2023 first quarter were 88,502 tonnes, compared to 98,912 tonnes in the corresponding period (Q1 2022 94,353 tonnes).
Meanwhile, the US Dairy Export Council in its latest market analysis said: “It is difficult to overstate just how impressive cheese exports have been so far this year”.
“In every month of 2024, cheese exports have led last year by a significant margin and the three highest months of cheese exports ever were achieved in March, May and April of this year, in that order.
“Cumulatively, cheese exports over the first five months of the year are up 27% (47,921 metric tonnes).”
Cheese exports were up across all major varieties, the council said.
However, it noted that overall, US dairy exports slipped 5% in May compared to the same month last year in milk solids equivalent terms. The decline followed a lift in April and highlighted the up-and-down nature of 2024 exports, with export sales mixed due to a wide variation across products and US regions, the council said.
The US is the world’s biggest cheese producer. New Zealand is the 7th, according to industry trade data.
The value of New Zealand cheese exports for the year ending March was $2.74 billion, compared to $2.77b in 2023 and $2.19b in 2022. Cheese volumes for the year ending March this year were 363.5 metric tonnes, compared to 345 tonnes in 2023.
Fonterra, the big cheese of New Zealand’s dairy export industry, said there had been seasonal variations in cheese volumes over the past five years.
Fonterra is New Zealand's biggest cheese exporter. Photo / Dean Purcell
“In 2024, volumes for the same period were above those in 2019, 2020 and 2022, but below those in 2021 and 2023,” the farmer-owned co-operative said in a statement.
“There’s a range of factors behind the seasonal variations including price. US export volumes may well ease in the coming months as US commodity prices have now come into alignment with those of Oceania and Europe.”
New Zealand industry watchers had mixed views on the reason for the Q1 drop in export values.
One believed it was due to a combination of reduced export volume and softening of the market price.
“The picture is mixed across markets. For example, volumes for China were largely flat from 2023 to 2024, and up on 2022. Volumes into Japan eased but the UK has moved from nothing to 3000 metric tonnes ($17.5m) which reflects the free trade agreement duty-free quota.
“Across all New Zealand dairy exports the returns from the March quarter 2024 (at) $6.28b were similar to March 2023 (at) $6.3b.”
Another said most of the value drop was price-driven.
“Global cheddar prices - a big component of the New Zealand export mix due to our geographic location and transit times - have dropped as demand became a little sluggish. This is currently improving and pricing is lifting again.”
The US year-to-date export growth was very much driven by cheeses such as mozzarella and fresh cheeses, a market observer said.
“Their cheddar exports in fact were down by around 10%. My assumption is they have moved away from cheaper cheddar to fresh mozzarella as they can export with quicker transit to Europe/Canada/Mexico, and it also allows them to extract more fat (mozzarella is low fat) to help supply the booming butter demand.
“This optionality is a little more difficult for New Zealand producers due to our small domestic market size and the vagaries of distance.”
Year-to-date, cheese returns for New Zealand were down around 11%, said an industry source.
“This accounts for a chunk of the drop. The remainder is likely processors pulling back volumes a little into other products, for example whole milk powder, or holding back shipments to capture improving prices.”
Another said there was a range of reasons why quarterly cheese volumes changed at individual product group level. Reasons included product mix decisions by processors based on relative returns across different manufacturing streams... and changes in shipping schedule timing.”
Andrea Fox joined the Herald as a senior business journalist in 2018 and specialises in writing about the $26 billion dairy industry, agribusiness, exporting and the logistics sector and supply chains.
