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Dairy markets continue to drag - April 2016

Things affecting our markets are:

  • Production
  • Economic Growth and Demand
  • Currency


Production numbers around the world are strong. EU production is up over 3%, USA about 2%, China is reported to be about 10% and while New Zealand is down 4% the suggested overall world market is up 2.1%.

Demand and Economic Growth

The weak demand is due mostly to poor and slowly recovering world economies. China's growth has dropped to 6.5% from 6.8% and they are expected to continue dropping for the next few years until they hit about 5%. China continues to struggle through the transition from being an export supported country to a consumer supported country. Unfortunately; the consumers are reluctant to spend because the economy is so poor.

Early forecasts suggested the US would grow at about 2.8% in 2016 but the latest numbers show a slight drop as the economy is slowing again. Current forecasts suggest growth to be between 2.6 - 2.7%. The US is a consumer supported country but consumers are not spending. There are definite signs of strength in the US markets in home sales, construction and employment. The unemployment rate is down around 5.3% but the trouble is that the jobs that were created to help put people back to work are not jobs that pay well enough to support a consumer supported country. Recovery will continue on a slow and steady path

The EU is expecting just better than 1% growth. Unemployment remains high in Europe and the Euro continues to weaken. Europe relies pretty heavily on Russia for Export business but Russian sanctions and a poor Russian economy has hurt the EU.

Russia's economy relies heavily on oil sales and all countries that rely heavily on oil have been feeling the crunch. Recently; in an attempt to change this, an agreement was made between Russia, Saudi Arabia and other oil producing nations to cap oil production in order to stop oversupply and end falling prices. This has pushed oil prices higher and will help in the short term for now. Russian economy is expected to remain in recession until Q3 and end the year on the positive side of growth as opposed to the -3% last year.


Currency plays a big part in the export market and the US has been hurt by a strong dollar. The U.S. dollar gained 11-15 percent against the currencies of our three main competitors—Australia, the EU and New Zealand. Exports are off better than 20% overall.  While we had a strong January 2016 this year so far we fall below 2015 numbers.

Top 10 Export Markets for the USA (2015 vs. 2014)


% Up

% Down

Mexico   22
Southeast Asia   35
Canada   6
China   35
S. Korea   27
S. America   4
Japan   33
Mid. East / N. Africa   59
Oceania   27
Caribbean   5

Current markets:

  • Nonfat is selling in the mid to upper $0.70's and inventories are growing. I am expecting nonfat numbers to drop more over the next few weeks.
  • Whey is dropping again as inventories rise and is selling between $0.26 and $0.28/LBS
  • MPC 70 is selling around $1.60, The higher protein MPC's are not moving much but MPC 85 is around $2.80 and MPI $3.20.
  • IWPC80 is the strongest selling dairy protein and prices have continued to creep upward. IWPC 80 is being offered between $1.85 and $2.10 mostly but I've heard as high as $2.20/LBS.
  • Instant WPI90 has been seen as low as $3.90 but selling mostly between $4.40 and $4.60/LBS.
  • Caseinates are spread between $3.20 - $3.60/LBS.