Watch out ladies and gentlemen, the dairy exports pipeline is plugging up.
Simply put, a glut is building and prices are falling.
Global milk supply and product demand during the second half of 2014 continue to go in opposite directions. Cheaper feed is driving higher milk output everywhere, but shaky economies and skidding currency values are making it harder to afford the resulting products.
For U.S. dairy exporters, the result has been a sharp decline in exports, which hit their lowest level in 19 months in September, according to the U.S. Dairy Export Council.
On a total solids equivalent basis, here are the monthly percentages of total U.S. milk production that left the country as exports during 2014:
January – 14.5%
February – 15.5%
March – 17.7%
April – 16.8%
May – 16.8%
June – 17.2%
July – 15.9%
August – 14.9%
September – 13.2%
Strong exports are vital to the financial health and well-being of U.S. dairy producers, so the fast and steep turnaround doesn't just mean that warehouses are filling up with powder and cheese. They also explain why farm milk prices have begun falling and why they still have such a long way to go.
This year may have been one for the dairy record books, but 2015 won't be.
