With global milk supplies beginning to contract and worldwide demand for dairy products showing growth, markets have begun to rebalance. Even so, the U.S. dairy sector continues on its own drumbeat to some degree, suggested Rabobank analyst Tom Bailey.
"Global fundamentals are starting to work pretty well," said Bailey. "In fact, six of the seven largest dairy export supply engines have now put the brakes on milk supply. The U.S. remains the exception as milk supplies continue to grow," he said in an early September interview.
"On the flip side, global demand, as measured by imports, has expanded to some degree," said Bailey in giving a preview to his Thursday, October 6, presentation at the 50th World Dairy Expo. "The one exception is the oil exporting countries in the Middle East and North Africa that have experienced reduced income from low oil prices. This matters because collectively these nations import more dairy products than China," said Bailey of the world's top dairy importer.
Cheese, butter, and even fluid milk have shown domestic growth. Even so, butter remains a risk as prices exceed the world market. "The markets have been upgraded from fragile to decent," said Bailey. "Even so, it still remains a buyer's market."
To register for Bailey's free October 6 presentation at World Dairy Expo, sign up by September 30 at on.hoards.com/WDE_GDS.