Economists with the Food and Agricultural Policy Institute predict weaker feed prices through 2009/2010, due to the weakened global economy. But they also say dairy prices will "continue to decline in the next couple of years” in testimony presented to Congress this week.
High carryover feed supplies from the last two years will depress commodity feed prices in the short term. Corn prices are expected to decline even further over the next year. But world population growth, recovery in incomes and bioenergy mandates will drive grain and feed prices back to historic highs after 2010.
On the dairy front, growing population and increasing incomes will put upward pressure on dairy prices. The FAPRI economists say Australia, New Zealand and the European Union will remain the world's largest dairy exporters. But as excess supply dwindles in Europe, Argentina and Brazil are poised to take up the slack.