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Dairy Export Market Will Be Key to 2013 Profitability
April 26, 2013

When milk prices hit their highest levels ever in recent years, much of the success was attributed to a strong export market. And according Dr. Bob Cropp with the University of Wisconsin Cooperative Extension, those international sales may be the best chance for bigger milk checks again this year. In his monthly Dairy Situation and Outlook report, the professor emeritus said domestic sales of cheese are reported to be fair with butter sales strengthening, but dairy exports are starting out above year ago levels.

“Compared to a year ago exports were up 34% for butter, 9% for cheese, 37% for lactose, and 43% for whey protein concentrates,” Cropp said. “But, exports of nonfat drymilk/skimmilk powder and dry whey were respectively 15% and 9% lower.”

He says exports are anticipated to improve as drought in New Zealand has cut their seasonal milk production short and output is running lower in Argentina and Australia, as well.  European countries are also producing less milk and dairy products.

“With this level of milk production in the major exporting countries we can expect exports of nonfat drymilk/skimmilk powder and dry whey to also run above year ago levels by summer,” Cropp noted.

Here in the U.S., dairy product prices have also shown real strength in recent weeks reflecting anticipation of continued growth in domestic sales. CME butter was $1.57 per pound the beginning of March and improved to $1.78 by April 19th. CME cheddar barrels were $1.56 per pound early last month and  were at $1.77 by April 19. Cheddar blocks were also improved to $1.88 as of last week.

“Stronger dairy product prices are adding strength to milk prices,” he adds. “The Class III price was $16.93 in March compared to $15.72 a year ago. The Class IV price was $17.75 compared to $15.53 a year ago. April prices will improve to near $17.65 for Class III and $18.30 for Class IV. Dairy futures  continue to show strength for distant months.”

He notes that if the growth in milk production continues to increase at a slow level as exports get better, the Class III milk price could reach as high as $20.00 by summer or early fall.

Source: Wisconsin Ag Connection



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