Slow Exports Hold Dairy Back

A sluggish international dairy market is counteracting the price supportive domestic environment. Ever.Ag Vice President Ryan Yonkman says U.S. milk production is down overall, but it’s being countered slow exports and low prices on the world market. 

“We’re getting ready to go into busy season,” he says, pointing to back-to-school milk cartons and holiday preparations for cheese and butter. “But we’re mapping it against an international market that is showcasing almost the exact opposite.”

European milk production is up. New Zealand is getting for its spring flush. This has led to price action showing weak demand, says Yonkman. Whole milk powder, the big ticket item for Chinese inputs, is down at the lowest price levels seen since 2016.

Yonkman was our live guest on the Mid-West Farm Report:

While the finger could be pointed at several countries to step up to the plate to purchase dairy components, China is the largest importer for U.S. dairy products. Yonkman predicts China won’t amp up buying soon, as their own milk production is at an all-time high.

In addition, the U.S. isn’t the most affordable option for our primary buyers. Closer countries to China are selling at a discount.

“We are kind of on a pedestal right now when it comes to prices in particular to cheese and butter,” Yonkman says. “On a powder front… even there we’re running a premium.”