The worldwide dairy trade has been in a challenging situation in the past year because of oversupply, but the U.S. market has started to see some bright spots, thanks to improving export markets.
Exports have been “surprisingly stronger,” says Naomi Blohm, senior market advisor at Stewart-Peterson. Recently U.S. dairy exports were up 9%, which has helped American producers.
Whey and powdered milk are still in strong demand, while cheese has fallen. However, last week showed some improvement for cheese with prices picking up 3 to 5 cents. That short-term rally in cheese prices is encouraging, according to Blohm.
Globally, competing countries like New Zealand and Australia are preparing for a drought by culling cows ahead of time. “Production is already down 1% (in the Oceania region), so what a little blessing for us,” Blohm says of the prospects for selling more U.S. dairy products overseas.
In the U.S., production is up 1%, so that has neutralized the playing field, Blohm adds.
If the the export market continues to move more dairy products prices should improve. Nevertheless, if producers continue to get milk checks of $13-14, states like Wisconsin, California and Michigan could experience culling, Blohm says.
Listen to Blohm's full comments here: