The U.S. Dairy Exporter Blog: Market Analysis, Research & News
  • Dairy Commodity Price Movements Bode Well for U.S. Suppliers

    By USDEC Staff September 21, 2016

    This month, the U.S. butter price gap with the EU was virtually erased. The cheese price gap has been cut nearly in half. 

    Halfway through September, the disparity between U.S. and international butter prices has narrowed to its smallest gap since early 2015. The difference between U.S. and international cheese prices improved from recent levels as well. While still facing a pricing disadvantage, the shifts—and market trends that suggest further movement to close convergence—contain the promise of a much-needed competitive boost for U.S. dairy suppliers.

    Since a brief moment of parity in early 2015, U.S. butter prices have averaged over US$1,700/ton more than EU butter and US$1,900/ton more than Oceania. This month, the U.S. butter price gap with the EU was virtually erased, falling to just US$33/ton, while the price gap with Oceania fell nearly 60 percent to US$766/ton. 


    In the half year from March-August 2016, U.S. cheddar ran at an average premium of US$467/ton vs. EU cheddar and US$667/ton more than Oceania cheese. In September, the U.S. price gap with the EU was nearly cut in half to US$245/ton. The price gap with Oceania declined 10 percent to US$595/ton.

    The unfavorable price gap has been a major contributor to U.S. suppliers losing export market share, particularly in cheese. Even in Mexico, where U.S. companies enjoy seamless market access through NAFTA and the advantages of proximity, recent U.S. cheese quotations have been high compared to alternative suppliers.

    While we still have a way to go before achieving parity, recent weeks have shown solid upward trend on international butter and cheese prices, while U.S. prices have trended lower. For most of 2016, market conditions have supported New Zealand’s efforts to diversify manufacturing away from whole milk powder (WMP) and toward butter and skim milk powder (SMP). Declining milk supply growth, buying patterns in China and shifts in milk powder pricing now suggest the nation might find WMP increasingly profitable vs. SMP/butter and consequently direct milk flows more heavily into WMP.

    More competitive U.S. prices don't automatically equate to greater U.S. dairy exports, particularly in the case of butter. But the current rise in international prices not only advances U.S. competitiveness, it attests to improving global dairy market health.

    Moving forward, as we roll into the Southern Hemisphere’s high season, keep an eye on New Zealand milk production in particular to see whether commodity price hikes have been enough to trigger a supply reaction and put this nascent market rebalance off kilter. While USDEC anticipated international dairy commodity price hikes, recent gains have been swifter and stronger than expected, once again highlighting the volatility inherent in today’s markets.

    Editor's note: The interactive charts above work best on a PC and may not render properly on a mobile device. Also, the numbers in the charts change automatically as new data come in. You can access all of the latest trade flow charts on The analysis on this page is based on available data on August 29. 

    Learn more about global dairy markets:

    Subscribe to the U.S. Dairy Exporter Blog    

    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.  

    Research & Data Market Conditions
subscribe to blog1

10 Most Recent Posts

Most Popular Posts in Past Year

Index of Posts by Topic

Index of Posts by Date, Author

Archives (by date)

+ more archives