At the moment dairy prices require careful monitoring therefore we have addressed to Brian Rice, Founder and Co-owner of Rice Dairy (USA) so that he could share his views on the hot dairy topics for the month.
Q.: Has the election of new US President affected US dairy market?
A.: Since the 2016 US Presidential election there have been large movements in currencies, most notably the US dollar has strengthened. When the US dollar strengthens relative to other countries’ currencies it takes the buying power away from the importing countries. Some dairy products, such as Non-fat dry milk, rely heavily on the export market for its consumer base. At times, the US non-fat dry milk market will export 50-60% of the total US production. Of the 50-60% of total production, the largest customer is Mexico. The USD/MX Peso currency rate has not helped the trade US non-fat dry milk to move to Mexico. However, to single handedly say it is due to the US presidential election, I think is false. Other relative SMP/Non-fat dry milk prices have also been moving lower as US non-fat dry milk has, most notably in Europe where the production is larger than the US.
Q.: With the skim milk powder prices hitting the new low, do you think milk prices will follow the trend?
A.: US milk prices are set by the dairy product prices. So, as skim milk prices have moved lower, it has already impacted the price of milk.
Q.: US Butter inventories are growing, how will it affect dairy prices in March?
A.: Domestic demand for milk-fat continues to grow. Additionally, other relative prices of milk fat from other large supplying regions around the world remain high. So, without the other regions moving lower, I would expect US butter prices to remain supported.
Brian Rice is the founder and Co-Owner of Rice Dairy LLC, a dairy brokerage firm in Chicago, IL. Rice Dairy LLC is now the leading brokerage firm in the dairy industry, offering consulting and brokerage services along with information products and educational resources. Rice is also the CEO of Vault Technologies, a dairy software start-up and the director of Rice Dairy International Ltd. He sits on the Board of Directors of the International Dairy Foods Association (IDFA) and is a member of the American Dairy Products Institute’s (ADPI) price and policy task force.