US farmgate prices see 30% reduction in 6 months

Published 1 April 15

US farmgate prices have fallen 30% since the highs seen 6 months ago to 22.24ppl ($16.80/cwt), in line with a 30% reduction in US wholesale prices over the same period. Wholesale prices for butter and Cheddar were uncompetitive on the global market 6 months ago and began to fall sharply once domestic demand became unable to absorb excess supply. The knock on effect has been the significant reduction in farmgate prices, placing pressure on US dairy farmer margins.

 US price graph 01.04.15

US wholesale prices are now more in line with global prices. Depending on domestic demand and export interest, they should continue to be competitive in the short term. However, the significant cut in price may result in a decrease in US milk production, potentially easing supply on the world market.