Despite the current downturn in global dairy markets, a new U.S. Dairy Export Council report says the fundamentals driving long-range global dairy trade demand should remain positive through 2020.
The report, “2020 Global Demand Forecast for U.S. Dairy Exports,” is part of USDEC’s ongoing strategic planning that it conducts with Dairy Management, Inc., its primary funder through the dairy check-off.
The report is also a useful supplement to USDEC’s continual assessments of current market conditions. In a December webinar, USDEC forecast it may take until 2017 for prices to increase to the point where global dairy markets have fully recovered from the current soft dairy cycle.
That assessment was confirmed in the January issue of USDEC's Global Dairy Market Outlook.
Looking past the downturn to the expected recovery, the new report says the U.S. dairy industry appears poised to capitalize on opportunities. But competition, especially from the European Union, will increase.
The report identifies these five multi-year market trends, among others, for U.S. dairy exporters:
1. Despite the currently tough market, prospects are positive for global growth.
2. Growth will be driven by economic and population dynamics in developing countries.
3. The U.S. dairy industry is positioned to build share in global dairy markets.
4. The U.S. dairy industry will be particularly well-positioned to capture growth in cheese, SMP and whey, with EU suppliers providing the toughest competition.
5. Cheese presents the most significant growth opportunity for the U.S. dairy industry.
“There will be growth,” said Ross Christieson, senior vice president of market research and analysis, who oversaw the report. “The United States is still well-positioned to take advantage of this growth but our competitors are also well-positioned. We need to continue to improve what we do with product, customer service, marketing, and supply chain efficiencies.”
Analyzing data and forecasts from previous years while projecting to 2020, the report offers these data points, among others:
- On a liquid milk equivalent (LME) basis, total global dairy trade grew 5.4% annually from 2007-2014.
- From 2014-2020, total global dairy trade is forecast to grow 3.7% annually.
- From 2007-2014, global cheese exports grew 6.2% annually.
- From 2014-2020, global cheese exports are forecast to grow 3.2% annually.
- Developing countries imported more cheese than developed countries in 2014, a trend likely to continue.
“We are encouraged to see that, despite the recent prolonged soft export market, long-term global dairy demand fundamentals are still in place that will again pressure available milk supplies,” said USDEC President Tom Suber. “This should bring both higher prices and a resumed export upside for U.S. suppliers. Yet with a resurgent EU industry, U.S. exporters will need to up their game.”
Learn more:
- 1/20/16 news release about report
- 7 Reasons a Global Dairy Recovery not Imminent
- Global Dairy Markets May not Fully Rebound Until 2017
– Written by Mark O'Keefe, USDEC editor-in-chief
