Quarterly Dairy Market Snapshot

Quarterly Dairy Market Snapshot

With first quarter’s Market Snapshots for dairy here is Northwest Farm Credit Services Michael Stolp.
Stolp: “Head winds that are facing the dairy industry include: strong global production, reduce milk exports, and falling cull cow prices. In international markets, EU milk production gains lower milk exports to China and the Middle-East are pressuring markets lower. Although feed prices are also lower, milk prices are projected below most producers’ break even prices through the first half of 2016.”
The snapshot continues with New Zealand shipped 140,000 tons of SMP to China in January. Ships were lined up in a competitive move ensuring New Zealand’s Skimmed Milk Product would be first to the Chinese market in the New Year. The road forward is unclear as 140,000 tons represents 100 percent of New Zealand’s tariff rate quota with China for the year. Further shipments would face a 7 percent tariff compared to the initial 3 percent. This large transaction was viewed as bullish for global dairy markets.
Moving forward, despite class III milk futures at or below producers’ breakeven price, stable domestic demand, combined with relatively inexpensive feed is expected to prevent further deterioration in producer returns. The USDA forecasts overall low, but steady, prices through the end of 2016.

 

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