Global Dairy Report Predicts Gradual Price Increases Amid Market Shifts
Source: The DairyNews
After a period of stagnant milk prices, the dairy industry is poised for a positive margin outlook through the end of the year, according to the latest global dairy report by Rabo AgriFinance. Lucas Fuess, Senior Dairy Analyst at RaboResearch Food & Agribusiness, highlighted significant market fluctuations, particularly the rising costs of butter which pose concerns for consumers, and shifting demand patterns from major importers.
The report details how traditional large importers like China, Japan, South Korea, and several Southeast Asian nations have reduced their imports. China’s efforts to boost domestic milk production and the stockpiling of powdered dairy products by Asian countries during the COVID-19 pandemic have softened demand for imported dairy goods. "China has significantly grown its milk output, reducing its reliance on imports," explained Fuess.
Despite the overall flat milk prices, there is a noted increase in demand for commodities such as cheese and nonfat dry milk, signaling good prospects for dairy farmers. For American producers, Mexico remains a robust market, especially for cheese, with steady consumption growth expected to continue. However, trade with Canada remains limited, reflecting the restrictive nature of Canadian dairy imports and exports.
Another challenge highlighted in the report is the potential impact of avian influenza on U.S. milk production, though effects have been minimal so far. Nevertheless, the situation is closely monitored, with subtle impacts noted in states like Texas where milk production dropped slightly in March.
Consumer spending behavior is particularly sensitive to butter prices, which have reached record highs. The report identifies high butter prices driven by limited processing plant investments and increased demand from the food service industry. Consumer preferences for cooking with healthy fats and single-ingredient products are also bolstering demand for butter.
Despite the overall flat milk prices, there is a noted increase in demand for commodities such as cheese and nonfat dry milk, signaling good prospects for dairy farmers. For American producers, Mexico remains a robust market, especially for cheese, with steady consumption growth expected to continue. However, trade with Canada remains limited, reflecting the restrictive nature of Canadian dairy imports and exports.
Another challenge highlighted in the report is the potential impact of avian influenza on U.S. milk production, though effects have been minimal so far. Nevertheless, the situation is closely monitored, with subtle impacts noted in states like Texas where milk production dropped slightly in March.
Consumer spending behavior is particularly sensitive to butter prices, which have reached record highs. The report identifies high butter prices driven by limited processing plant investments and increased demand from the food service industry. Consumer preferences for cooking with healthy fats and single-ingredient products are also bolstering demand for butter.
