US in pole position for market advantage

Published 7 December 16

Now with positive prices back in the global market, as well as more competitive prices across the world, the US would seem best placed to take advantage.

In Oceania, milk production has been consistently lower in 2016, compared to 2015. Lower commodity/farmgate prices over the last few years led to a reduction in the milking herd. This has resulted in milk production falling 3.0% (Jan-Oct) below the year before, which equates to just under 700m litres. In the EU, production started the calendar year comfortably above 2015. However, production fell around 1.5% each month from June to August, while September saw a 2.8% drop year on year.

In the US, milk production has constantly been higher in 2016 than 2015, with the percentage gap generally getting larger each month. Jan-Oct production was up 1.35bn litres. The US has benefited somewhat from a strong domestic market, relieving some of the pressure from falling global prices, with butter and cheese prices trading at a premium to the EU and Oceania for most of 2015 and 2016.

US pole 07.12.16

Reduced production in the EU and Oceania has been one of the key reasons for the upward pressure in the wholesale markets. With the US continuing to produce more milk, it could leave them in pole position to take advantage of the market.