Japan Announces 2nd Emergency Dairy Import in 4 Months Oct. 9, 2014
The September 26 announcement signals the Government of Japan’s commitment to stabilize demand and supply for key dairy commodities and will provide welcome relief for the Japanese processed products, baking and confectionery sectors. August monthly ending stocks (latest available data) for butter and NFDM were down 32 and 26 percent, respectively, over August 2013 levels, and average monthly wholesale prices in August for both butter and NFDM were six percent higher than August 2013. The Agriculture and Livestock Industries Corporation (ALIC) will issue tenders for the September 26 commitments between now and the end of the fiscal year ending March 2015. While the competitiveness of U.S. bids on the quantities to be tendered will depend on a number of factors, U.S. exporters supplied only 25 MT out of the 7,000 MT of butter that ALIC tendered following the May 21 announcement.
The same market dynamics that drove MAFF to announce emergency imports of butter and an additional NFDM allocation in May (namely declining fluid milk production and growing demand for dairy products other than butter and NFDM) have continued through the summer months. Hokkaido, the largest producer of fluid milk and the hub of Japanese dairy product manufacturing, continues to experience lower fluid milk output (down 3-4 percent year-on-year over the January to July period). Japanese butter and NFDM production have each shown double-digit declines in the January to July period, as Japanese dairy processors continue to realize higher profit margins on dairy products (notably fresh cream and natural cheese) other than butter and NFDM.
FAS/Japan will release its 2014 Dairy and Products Annual Report in the latter half of October