What Will Define a Global Dairy Market Recovery?

Real market recovery must be felt at the farm, requiring a sustained skim milk powder price of at least $3,000/ton.

Global dairy markets might not see a full recovery until 2017, given milk production trends, worldwide dairy stocks, the tepid global economy, and China and Russia’s low profile on the buy side.

“What we have today is most likely what we will have for 2016—a market looking for equilibrium,” said Marc Beck, USDEC executive vice president of strategy and insights, at the recent Global Dairy Outlook webinar.

Markets are highly sensitive right now given the supply-side strain they are under―there’s a lot of emotion in the market―which is exacerbating volatility. That was evident in the August-September run-up in international dairy commodity prices followed by the swift downturn in October and November.

“In order to have a ‘real’ recovery, we will have to see a sustained building of prices at levels that will allow more attractive margins to return back to the farm,” said Beck.

A real recovery means, at a minimum, an SMP price of $3,000/ton, but more ideally something closer to $3,500/ton, he noted, to support growth across the supply chain—from the farm-gate through to the consumer.

For a more thorough account the USDEC Global Dairy Outlook webinar and market conditions, read this U.S. Dairy Exporter Blog entry, Global Dairy Markets May not Fully Rebound Until 2017. Plus, you can listen to the archived version of the USDEC Global Dairy Outlook webinar. The recorded event is available here to anyone who registered. If you’d like to listen to the archived version, but did not register, you can still register and access the event by clicking here.

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The U.S. Dairy Export Council fosters collaborative industry partnerships with processors, trading companies and others to enhance global demand for U.S. dairy products and ingredients. USDEC is primarily supported by Dairy Management Inc. through the dairy farmer checkoff. How to republish this post.