US Dairy Market vs. Canadian and Other Export Markets
12 April, 2017
category: Commodities, Food
Picking Alpha has asked a leading USA dairy broker Brian Rice, the founder and Co-Owner of Rice Dairy LLC, in Chicago, IL, to give his perspective on the Dairy Export Markets that might have possible effect on US Dairy. And of course, we have to keep asking the same question all the time about Dairy markets and Brexit uncertainty:
“The UK is large consumer of dairy products, to the extent in which the region needs to import about 30% on top of its production to meet demand. Brexit will have an impact for countries that export to UK which are several countries within the EU”, said Brian Rice.
Q.: What is happening with supply on the dairy market with the lower feed prices? How it will affect demand? And overall dairy prices?
A.: Supply in the US continues to grow, most notably in the Midwest and Southwest. In the EU, milk production is lower year over year but the decreases are slowing. In New Zealand, the start of the production year looked to be negative but have since recovered and recent forecasts are showing this season be similar to what was produced last year. Looking at the supply growth and existing stocked dairy products, prices will likely have modest highs later in the year.
Q.: Is the demand on upswing or stable?
A.: There have been shifts in how dairy is consumed but dairy demand has been stable over long run trends.
Q.: How Easter Holidays affect the market?
A.: Easter and Passover holidays are each large consumption times for dairy products, most notably fat. Butter is used in many baking dishes, egg dishes, and confectionary products. However, the demand for Easter is generally factored in as demand that happens every year.
Q: After the new Canadian Ingredient strategy was implemented, how do you foresee the US dairy farmers will recover from their losses as a result of it?
A.: It may cause a few near term hiccups for the spot fluid milk trade across pockets of the Northeast, Midwest and West. However, it seems like the volume, in the big picture, isn’t something that the US dairy manufacturing industry isn’t able to absorb. It does seem to potentially reduce a physical arbitrage that has been happening due to the supply management system that is in place for the Canadian dairy industry.