U.S. Dairy Exports Influence Domestic Marketing Dynamics

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Producers must appreciate and understand the risks in the global dairy market when making risk management decisions at home.The export of U.S. dairy products has become an increasingly important part of the U.S. dairy industry over the past several years. Net exports of U.S. milk production now exceed 10% on a milk solids basis. It is important for dairy producers to understand the dynamics of this part of the market since it has largely been the outlet for soaking up growth in supplies and supporting prices.
U.S. dairy exports are largely made up of nonfat dry milk and, from time to time, a significant amount of butter. Cheese has historically been a net import, but in recent years has shown a steady growth and now makes up a small amount of exports.
Dairy exports represent a bright spot, supporting growth in the U.S. dairy industry, especially in light of a relatively stagnant domestic market. Over the last decade, domestic dairy demand has grown only about 11% while export demand has grown 113%.
The export growth story has not been a smooth ride. Year-over-year changes in exports have swung wildly compared to the generally single digit year-over-year changes in domestic demand.
Much of the volatility is driven by weather in New Zealand, the world’s largest dairy exporter. Their grazing production model is highly reliant on consistent rainfall. In years of severe and moderate drought in Oceania, the U.S. has stepped in to fill the void in global dairy trade.
As the world dairy export market grows, the linkages between product prices have increased significantly. This increases the sensitivity of U.S. prices to world weather, production, growth and policy changes. As evidenced by the incredible growth in global dairy trade over the last decade, this is a phenomenon that is unlikely to end any time soon. Accordingly, producers must appreciate and understand the risks in the global dairy market when making risk management.
Source:  AGWeb

Mirá También

Así lo expresó Domingo Possetto, secretario de la seccional Rafaela, quien además, afirmó que a los productores «habitualmente los ignoran los gobiernos». Además, reconoció la labor de los empresarios de las firmas locales y aseguró que están «esperanzados» con la negociación entre SanCor y Adecoagro.

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