Russia's largest dairy commodity import, cheese, is sourced largely from countries that have now been banned. In the current year to April, 90% of Russia's cheese imports have been sourced from countries that are now banned.
Russia's butter imports are more widely sourced, with 63% sourced from countries it now bans. The remaining 37% of butter imported by Russia this year has come from mostly from New Zealand, Uruguay and Argentina.
Demand for dairy products in Russia may be met, if at all, by increased imports from countries that are not banned or by transshipment of banned product.
Meanwhile the surplus product is expected to pressure prices downward. EU cheese, which makes up most of Russia's cheese imports, trades at a premium to US or Oceania product and will likely bear the brunt of price cuts.
New Zealand may benefit from the ban in the short-term but the overall impact on dairy markets is extremely bearish.
