Report Highlights:

As medium term trends in genetics and technology continue its implementation in high-end farms, Mexico's milk production is seen higher in MY2015 while cheese consumption and imports, which might be affected due to stagnant purchasing power in specific sectors of the population, are seen lower in MY2014 and MY2015. The outlook for the remainder of the complex is largely similar to previous forecasts.

Dairy, Milk, Fluid

Production:

The new Post MY2015 (January to December) fluid milk production estimate is revised slightly upward from our previous forecast figure to 11.84 MMT, based mainly on newly revised data published by Mexico's Agriculture ministry, SAGARPA. In addition, previously reported medium term trends in genetics and technology continue to lift Mexican milk production. As with MY2015, the new Post fluid milk production estimates for MY2014 is revised upward given the above mentioned factors and, also, due to LICONSA's (LICONSA, S. A. de C.V. is "a state-owned company devoted to the industrialization and distribution of high-quality milk at a reasonable price, whose main purpose is supporting the nutritional resources of disadvantaged families.") increased price paid to producers that undoubtedly enticed them to increase production in 2014. MY2013 production figures were revised slightly upward to reflect the latest official data.

Consumption:

The new Post MY2015 total fluid milk consumption forecast (domestic and factory use) is 11.87 MMT, up just one percent up from the 2015 USDA official figure, based on anticipated slightly higher production levels. The industry confirms that the consumption of added-value products for middle and upper income consumers with sustained support from LICONSA for lower income consumers is an ongoing trend. The Post MY2014 total fluid milk consumption estimate is revised upward as the increased demand by the industry (factory use to prepare added-value products), has grown while keeping domestic fluid milk consumption in check. MY2013 production figures were revised slightly upward to reflect the latest official data.

The dairy processing industry continues responding to increased demand for specialized products, such as the new Greek yogurt boom, lactose-free, high-calcium, and even reduced fat fluid milk products. Consequently, specialized dairy products continue gaining domestic market share and greater volumes of fluid milk are being directed to processing use. All of this demonstrates the improvement in the mid-high consumer's income and, also, their concern about obesity problems compelling them now to be more focused on nutritional and functional benefits.

Trade:

The new Post MY2015 import forecast is revised slightly down from the 2015 USDA official estimate, at 40,000 MT, based on the forecasted increase in domestic production. The government notes that this also fits with the medium to longer-term goal of the current administration. As previously reported, this program seeks to grow the importance of domestic production relative to imports. The Post MY2014 and MY2013 fluid milk import estimate were revised down from the USDA estimate, due to slightly higher production in 2014 and 2013, per official data. In addition, this decrease can be attributed to the LICONSA program to purchase more domestic product.

The Post MY2015 fluid milk export estimate is expected slightly down compared to the USDA official figure, at 12,000 MT, as sustained demand from the industry reduces product availability for export, especially given less attractive international prices. Post's MY2014 and MY2013 export estimate were kept unchanged.

Dairy, Milk, Fluid

2013

2014

2015

Market Begin Year

Jan 2013

Jan 2014

Jan 2015

Mexico

USDA Official

New post

USDA Official

New post

USDA Official

New post

Cows In Milk

6,300

6,300

6,350

6,350

6,400

6,400

Cows Milk Production

11,255

11,294

11,442

11,464

11,600

11,682

Other Milk Production

156

157

157

160

160

160

Total Production

11,411

11,451

11,599

11,624

11,760

11,842

Other Imports

42

41

42

35

41

40

Total Imports

42

41

42

35

41

40

Total Supply

11,453

11,492

11,641

11,659

11,801

11,882

Other Exports

10

10

11

11

13

12

Total Exports

10

10

11

11

13

12

Fluid Use Dom. Consum.

4,160

4,160

4,180

4,180

4,185

4,185

Factory Use Consum.

7,283

7,322

7,450

7,468

7,603

7,685

Feed Use Dom. Consum.

0

0

0

0

0

0

Total Dom. Consumption

11,443

11,482

11,630

11,648

11,788

11,870

Total Distribution

11,453

11,492

11,641

11,659

11,801

11,882

1000 HEAD, 1000 MT

Dairy, Cheese

Production:

The new Post MY2015 total cheese production estimate is kept unchanged at 280,000 MT, reflecting availability of fluid milk and stable demand for aged and fresh cheeses and cheese products. The Post MY2014 and MY2013 cheese production estimates remain unchanged.

Consumption:

The new Post MY2015 total cheese consumption estimate is marginally reduced to 370,000 MT, from the USDA official figure as demand for aged cheeses is expected to remain fairly stable among high-middle and high-income consumers, but low and lower-middle income consumers demand for fresh cheese products might be affected due to stagnant purchasing power. The MY2014 consumption estimate was revised down based on input from private sources that cite reduced consumer's purchasing power given lower than expected economic growth. MY2013 figures were revised downward to reflect the latest official data.

Trade:

The new Post MY2015 cheese import estimate is expected lower at 95,000 MT, as fluid milk availability will allow for sustained domestic production and substitute for additional imports. However, Mexico will continue importing raw materials to complement domestic production. Post's MY2014 estimate was revised down by about 11 percent compared to the USDA official figure, given stagnant consumer purchasing power. MY2013 import estimates were revised down to reflect recently published official data.

The new Post MY2015 estimate for cheese exports is 5,000 MT, marginally down from the USDA official figure. Despite competition in international markets with EU chesses that are being diversified to other markets given the Russian embargo, Mexican cheese manufacturers continue targeting new market niches supported by increased domestic fluid milk production. Nevertheless, low international prices could play an important role in making export decisions. Post's MY2014 revised estimate is below the USDA official figure given the same effects above mentioned. MY2013 export estimate is unchanged reflecting the latest official data from the Secretariat of Economy.

Dairy, Cheese

2013

2014

2015

Market Begin Year

Jan 2013

Jan 2014

Jan 2015

Mexico

USDA Official

New post

USDA Official

New post

USDA Official

New post

Beginning Stocks

0

0

0

0

0

0

Production

270

270

275

275

280

280

Other Imports

103

91

99

88

99

95

Total Imports

103

91

99

88

99

95

Total Supply

373

361

374

363

379

375

Other Exports

5

5

5

4

6

5

Total Exports

5

5

5

4

6

5

Human Dom. Consumption

368

356

369

359

373

370

Other Use, Losses

0

0

0

0

0

0

Total Dom. Consumption

368

356

369

359

373

370

Total Use

373

361

374

363

379

375

Ending Stocks

0

0

0

0

0

0

Total Distribution

373

361

374

363

379

375

1000 MT

Dairy, Butter

Production:

The new Post MY2015 butter and butterfat production estimate is unchanged at 195,000 MT, based on the availability of fluid milk and sustained demand from consumers for specialized products. The Post MY2014 figure was revised marginally up given the fairly strong demand from the industry that requires this product for the elaboration of specialized products. MY2013 estimates were kept unchanged based on industry data.

Consumption:

The new Post butter and butterfat consumption estimate for MY2015 is unchanged from the USDA official figure as the demand from the industry is expected to be fairly stable for domestic and imported product by the bakery and confectionary sectors. Despite slightly higher production, the new Post consumption estimate for MY2014 was revised marginally lower than the USDA official figure as increased international prices limited imports. MY2013 figures were adjusted to reflect data from the industry.

Trade:

The available year to date data does not suggest stronger import volumes over the pace of the preceding year. The new Post MY2015 import estimate for butter (HTS 040510) and butterfat (HTS 040590) is 40,000 MT, in line with the official USDA estimate. The Post MY2014 was revised down given increased international prices, more specifically from New Zealand butterfat, that limited the imported amount. MY2013 import estimates were revised downward to reflect official figures.

Mexican butter and butterfat exports are beginning to emerge in trade data, albeit from a small base. In line with the official USDA estimate, the new Post MY2015 forecast is slightly higher compared to the new Post MY2014 estimate. MY2014 exports were reduced mainly due to tighter overall supply. MY2013 export estimate was revised downward to reflect official figures.

Dairy, Butter

2013

2014

2015

Market Begin Year

Jan 2013

Jan 2014

Jan 2015

Mexico

USDA Official

New post

USDA Official

New post

USDA Official

New post

Beginning Stocks

0

0

0

0

0

0

Production

190

190

190

192

195

195

Other Imports

50

40

35

30

40

40

Total Imports

50

40

35

30

40

40

Total Supply

240

230

225

222

235

235

Other Exports

6

5

8

6

8

8

Total Exports

6

5

8

6

8

8

Domestic Consumption

234

225

217

216

227

227

Total Use

240

230

225

222

235

235

Ending Stocks

0

0

0

0

0

0

Total Distribution

240

230

225

222

235

235

1000 MT

Dairy, Milk, Nonfat Dry

Production:

The new Post MY2015 production estimate for Non-fat Dry Milk (NFDM) is 55,000 MT, the same as the USDA official figure. As previously reported, NFDM is manufactured in substantial volumes only when production of fluid milk allows it. Also, the sustained demand by other dairy subsectors limits NFDM production growth. Post's MY2014 and MY2013 NFDM production estimates are unchanged and based on official information from SAGARPA.

Consumption:

The Post NFDM MY2015 consumption forecast is set at 265,000 MT, in line with the USDA official number, given the sustained demand from the processing industry for the preparation of added-value products. The Post consumption estimate for MY2014 was revised up slightly from the USDA official figure given marginally increased imports. MY2013 figures were kept unchanged.

Trade:

The new Post MY2015 import estimate for NFDM is kept unchanged at 210,000 MT, as domestic production is flat (as noted above) with imports filling the gap. The MY2014 figure is marginally higher than the USDA official data due to the sustained demand of NFDM from the processing sector. MY2013 import estimate is unchanged.

No exports are forecast for MY2015. Also, no exports were recorded in MY2014 or MY2013.

Dairy, Milk, Nonfat Dry

2013

2014

2015

Market Begin Year

Jan 2013

Jan 2014

Jan 2015

Mexico

USDA Official

New post

USDA Official

New post

USDA Official

New post

Beginning Stocks

0

0

0

0

0

0

Production

55

55

55

55

55

55

Other Imports

198

198

200

203

210

210

Total Imports

198

198

200

203

210

210

Total Supply

253

253

255

258

265

265

Other Exports

0

0

0

0

0

0

Total Exports

0

0

0

0

0

0

Human Dom. Consumption

253

253

255

258

265

265

Other Use, Losses

0

0

0

0

0

0

Total Dom. Consumption

253

253

255

258

265

265

Total Use

253

253

255

258

265

265

Ending Stocks

0

0

0

0

0

0

Total Distribution

253

253

255

258

265

265

1000 MT

Dairy, Dry Whole Milk Powder

Production:

The new Post MY2015 dry WMP production estimate is maintained unchanged at 153,000 MT, same as the USDA official data. Although increased fluid milk production could allow a production increase, the dry WMP subsector will need to keep competing for this supply with others in the processing industry to produce added-value products. In addition, demand is expected to remain relatively stable. The MY2014 and MY2013 estimates are unchanged.

Consumption:

The dry WMP consumption forecast for MY2015 is set at 154,000 MT. This is up slightly from USDA's current estimate, due to the continuation of the Government of Mexico (GOM) project to enlarge LICONSA's coverage under its social supply of milk program. Historically, LICONSA purchased NFDM and WMP to be reconstituted and distributed under its social program. Despite LICONSA's intensifying purchases of domestic fluid milk rather than imported dry WMP, like MY2015, the new Post MY2014 was revised slightly up from the USDA official to 151,000 MT. These bumps are due to the continued demand for WMP from the processing industry for preparation of added-value products. The Post MY2013 estimate is kept unchanged.

Trade:

Available year to date data does not suggest stronger import volumes over the pace of the preceding year. However, the Post MY2015 import forecast is set at 6,000 MT, marginally up from the USDA official estimate. Even though LICONSA continues purchasing domestic milk rather than importing dry WMP, added-value processors continue to demand it for reconstitution into sweetened fluid milk. Post MY2014 import estimate is slightly up given the same factors from above. MY2013 import estimates were unchanged.

Post's MY2015 export estimate of WMP is stable at 5,000 MT, in line with the USDA official figure, as year to date data does not suggest stronger volumes over the pace of the preceding year. MY2014 and MY2013 export estimates are unchanged.

Dairy, Dry Whole Milk Powder

2013

2014

2015

Market Begin Year

Jan 2013

Jan 2014

Jan 2015

Mexico

USDA Official

New post

USDA Official

New post

USDA Official

New post

Beginning Stocks

0

0

0

0

0

0

Production

150

150

150

150

153

153

Other Imports

11

11

6

7

5

6

Total Imports

11

11

6

7

5

6

Total Supply

161

161

156

157

158

159

Other Exports

5

5

6

6

5

5

Total Exports

5

5

6

6

5

5

Human Dom. Consumption

156

156

150

151

153

154

Other Use, Losses

0

0

0

0

0

0

Total Dom. Consumption

156

156

150

151

153

154

Total Use

161

161

156

157

158

159

Ending Stocks

0

0

0

0

0

0

Total Distribution

161

161

156

157

158

159

1000 MT