Long-Term Dairy Prospects Remain Strong for US Milk Producers

Despite a sustained downturn in global dairy markets, a new US Dairy Export Council (USDEC) analysis has forecast that the fundamentals driving long-range global dairy trade demand remain positive through to 2020.

The report says demand will grow, but with less strength than the past decade, and with increased international competition for US producers, especially from the European Union.

Even with those challenges, US dairy exporters are positioned to compete for increased export volumes and global market share in key product sectors, particularly cheese.

“We are encouraged to see that, despite the recent prolonged soft export market, long-term global dairy demand fundamentals are still in place that will again pressure available milk supplies,” said USDEC President Tom Suber.

“This should bring both higher prices and a resumed export upside for US suppliers. Yet with a resurgent EU industry, US exporters will need to up their game.” – Click here to read more.

This week’s Global Dairy Trade (GDT) auction has shown a fall in the GDT price index of 1.4 per cent.

This is the second event in a row in which prices have fallen.

New Zealand's Federated Farmers organisation warned that the results put Fonterra’s forecast farmgate payout of $4.60/kg increasingly out of reach.

GDT is owned by the dairy co-operative Fonterra, and over 10,000 of the company's farmer-shareholders are based in New Zealand.

“Today’s weak GDT result is disappointing and things are certainly looking much worse in terms of the farmgate milk price. We have just seen Open Country Dairy drop its forecast and this result increases the likelihood Fonterra will do the same,” said Federated Farmers Dairy Chair, Andrew Hoggard.

“It is still possible that a sudden upswing in prices could get us there, but we’d need to see some very large increases in the next couple of months to reach the $4.60 mark.

"Even that is a fairly poor payout for most farmers, and falling below that is just going to ramp up the pressure on the dairy industry and those that support it.” - Read more.