Friday, March 29, 2024

Round-up: Factors to influence US dairy exports in 2016

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USDEC offers a preview of the year ahead, identifying trends that will shape bottom lines. Predicting the future is not a science, but at the US Dairy Export Council the experts have identified six underlying factors that will shape supply, demand and the US dairy industry’s ability to compete in the international marketplace in the year ahead. Here they are:
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1. A world awash in milk

For months, USDEC has said milk production growth from the world’s dairy exporters needs to decrease to match lower buying levels in China and Russia.

Despite sharply reduced Chinese and Russian purchasing and declining farmgate prices, milk production for many has remained sufficiently profitable to slow but not halt major shifts in net supply growth. Milk output from the top five suppliers – the European Union (EU), United States, New Zealand, Australia and Argentina – rose 2% from April 2015 (after EU milk production quotas fell away) through to September. USDEC estimates fourth quarter 2015 output from the top five will show a rise of about 1%. 

Although currency plays a role in dairy trade, that role is secondary to many other factors, with supply and demand at the very top of the list. The main area of concern for a rising dollar is the potential impact it has on overall demand from major importing nations. Because dairy trade is denominated in US dollars, a strong dollar could lift import prices that will eventually work their way through to consumers and potentially deter consumption. That can curb demand growth, and that would be bad for dairy exporters from all countries.

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