What will define a recovery in global dairy markets?
Global dairy markets might not see a full recovery until 2017, according to Alan Levitt of the US Dairy Export Council.
He said that given milk production trends, worldwide dairy stocks, the tepid global economy, and China and Russia’s low profile on the buy side, it could be 2017 before dairy markets recovery fully.
Markets are highly sensitive right now given the supply-side strain they are under―there’s a lot of emotion in the market―which is exacerbating volatility, he said.
“That was evident in the August-September run-up in international dairy commodity prices followed by the swift downturn in October and November.”
Levitt quotes colleague Marc Beck, USDEC Executive Vice President of Strategy and Insights, as saying that in order to have a ‘real’ recovery, we will have to see a sustained building of prices at levels that will allow more attractive margins to return back to the farm.
“A real recovery means, at a minimum, an SMP price of $3,000/ton, but more ideally something closer to $3,500/ton, he noted, to support growth across the supply chain—from the farm-gate through to the consumer.”
The US Dairy Export Council is a non-profit, independent membership organisation that represents the global trade interests of US dairy producers, proprietary processors and cooperatives, ingredient suppliers and export traders.
Alan Levitt is Vice President of Communications and Market Analysis at USDEC.