The U.S. Dairy Exporter Blog: Market Analysis, Research & News
  • What Will It Take to Turn Dairy Markets Around?

    By Alan Levitt November 17, 2015

    Prices continue to fall; USDEC webinar will provide market outlook.

    The average winning price at today’s Global Dairy Trade (GDT) auction was down for the third straight event—falling 8 percent from Nov. 3. Despite a reduction in volume available on the auction, the average whole milk powder (WMP) price was just $2,148/ton, down 11 percent from the previous event and down 24 percent since Oct. 6. Skim milk powder dropped 8 percent, to $1,851.


    WMP futures on NZX have signaled price declines on the auction for weeks. January WMP futures settled at $2,080 yesterday, down more than $1,100 since early October.

    Though global milk production growth is slowing, it’s not retreating fast enough relative to demand. We estimate production from the top five suppliers (EU-28, United States, New Zealand, Australia and Argentina) was down fractionally in September (vs. a year ago), while output will be up 0.5 percent to 1 percent in the fourth quarter.

    Fonterra maintains its view that its New Zealand milk collection will be down at least 5 percent this year, equivalent to about 150,000 tons less WMP. However, the market remains saturated and we don’t expect the loss of this volume to cause significant hardship.

    SMP supplies are ample as well. Stockpiles in Europe and the United States are heavy, with older powder coming on the market. Meanwhile, orders have slowed, as end-users have sufficient coverage into next year.

    Most suppliers and analysts expect the global dairy markets to recover by mid-2016. But that begs several questions: What do we mean by “recovery”? What will it take to get there by the middle of next year? And is that still a realistic timeline?

    spotlight_-_webinar_110515-047729-editedTo discuss these questions and more, the U.S. Dairy Export Council (USDEC) is hosting its annual “Global Dairy Outlook: 2016” webinar, Dec. 1, at 2 p.m. ET. I’ll be joined by Marc Beck, USDEC’s executive vice president of strategy and insights, in a look at the drivers and dynamics that will shape the markets in the year ahead.

    To register for this free, one-hour event, click here.

    Visit our home page    

    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. 

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