Drop in Dairy Exports Similar to 2009

September 21, 2015 01:32 PM

Despite recent gains in world dairy prices, U.S. dairy exports continue to lag last year by about 2% of national output.

That’s OK if the U.S. domestic market can absorb these sales, says Mark Stephenson, a University of Wisconsin dairy economist, speaking today on his monthly Dairy Market Outlook podcast “I could be nervous about that,” he says.

But so far, domestic cheese and butter sales have held up. In fact, per capita butter sales are now there highest since 1944, reports Bob Cropp, who also participates in the podcast.

It still may be some time before exports rebound. World prices for cheddar cheese are $1.45 while wholesale prices here are $1.57/lb. World butter prices are at $1.40/lb while U.S. prices are at $2.58. The U.S. is competitive on skim milk prices. But both the European Union and New Zealand will be selling hard because of Russia’s embargo and China’s exit from the market.

Cropp doesn’t see U.S. milk prices rebounding at least until mid-year 2016, if then. The good news, though, is that feed prices have softened.

Both Cropp and Stephenson income over feed cost margins to remain above $8/cwt, perhaps all the way through 2016. “I don’t see any drops below $7 or anything like that,” says Cropp.

View the entire podcast here. 

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