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Archive for US dairy exports

DOLLAR DIVE: How Currency Chaos Could Save US Dairy Exports (But Don’t Celebrate Yet)

Sunday, March 23rd, 2025

Dollar dive vs. tariff wars: Can currency chaos save US dairy exports? The Bullvine breaks down the high-stakes game.

EXECUTIVE SUMMARY: The US dairy industry faces a paradox: a weakening dollar boosts export competitiveness, but retaliatory tariffs threaten profitability. A 5.7% dollar drop since January 2025 has made American dairy cheaper globally, offsetting some tariff impacts. However, tariffs on key markets like Mexico (25%) and China (10-15%) risk eroding gains, with Cornell University projecting a $6 billion loss over four years. While cheese and milk powder exports surged in 2024, domestic demand remains critical, as 84% of US milk stays at home. Farmers must navigate volatility by diversifying markets, focusing on premium products, and hedging against currency swings. The dollar’s decline is no silver bullet – it’s a temporary reprieve demanding strategic action.

KEY TAKEAWAYS:

  1. Currency advantage vs. tariff pain: A weaker dollar offsets tariff hikes, but margins remain fragile.
  2. Premium products win: High-quality dairy (e.g., cheese, butterfat) outperforms in tariff-hit markets.
  3. Diversify or die: Shift focus to Southeast Asia, Africa, and Middle East to reduce reliance on Mexico/China.
  4. Domestic risks linger: A weak dollar could trigger recession, threatening 84% of US milk consumption.
  5. Hedge aggressively: Financial tools are essential to survive currency/tariff volatility.
US dairy exports, currency fluctuations, tariff impacts, global dairy trade, dairy market volatility

Uncle Sam’s wallet is getting lighter by the day, and for once, that might not be terrible news for America’s dairy farmers. The almighty dollar has taken a nosedive, shedding a whopping 5.7% of its value since January – the kind of freefall we haven’t seen since the 2008 financial crisis.

But here’s where it gets interesting: while politicians play chicken with tariffs, this currency slide is quietly reshaping the global dairy chessboard. Every cent the dollar drops makes American dairy more appetizing to foreign buyers. It’s like a sale at the global dairy store, and Uncle Sam’s cheese is suddenly the bargain of the century.

Key Data:

Metric2024 ValueChange
Total US Dairy Exports$8.2B+2% YoY
Cheese Exports to Mexico+30% (Dec 2024)Record high
Butterfat Exports+28% (2024)Driven by Canada

Tariff Wars: The $6 Billion Migraine

Let’s not sugarcoat it – the tariff situation is a Grade A disaster for US dairy. President Trump’s recent temper tantrum slapped a 25% tax on most goods from Mexico and Canada, with China getting hit with a 10% surcharge. These aren’t just any markets – they’re the holy trinity of US dairy exports, gobbling up over half of what we ship overseas.

Cornell University’s Charles Nicholson puts it bluntly: “If you pick a trade fight with our major export destinations, the retaliation will cost dairy farmers $6 billion over four years.”

Farmer Reality Check
“The dollar drop saved my cheese exports to Japan, but tariffs erased those gains. We’re stuck in a never-ending cycle of policy whiplash.” – Sarah Miller, Wisconsin Cheese Exporter (USDA Farm Report, 2025)

But here’s the twist: even with these tariffs, certain American dairy products could stay in the game, especially in the premium market where quality trumps price sensitivity.

The Great Currency Offset: Can Math Save the Day?

Here’s where things get interesting – and where The Bullvine’s going to do some math that’ll make your head spin. We’ve got tariffs pushing prices up 10-25%, but a dollar drop giving us a 5-6% discount. Sounds like we’re still underwater, right?

Mike North, president of Ever.Ag, throws a wrench in the works: “Only small changes can have large impacts on price.”

Tariff vs. Currency: The Breakdown

FactorImpactOutcome
25% Tariff+25% Price IncreaseOffset by 5-6% Currency Discount
10% Tariff+10% Price IncreasePartially Offset by Currency
5.7% Dollar Decline-5.7% Price DropBoosts Competitiveness

Take cheese exports, for example. Despite the tariff tempest, they jumped 12% in August compared to last year. Japan, South Korea, and Mexico couldn’t get enough of our cheddar. Milk powder? Up a whopping 15%, with Southeast Asia and Africa suddenly treating American powder like it’s going out of style.

The Risks No One’s Talking About

While the dollar’s decline offers relief, economists warn of volatility. Dr. Ben Brown, University of Missouri, cautions: “Currency fluctuations are unpredictable – farmers shouldn’t rely solely on exchange rates. A sudden dollar rebound could erase export gains overnight.”

Key Vulnerabilities

  1. Dollar Rebound Risk: A Fed rate hike could reverse currency trends.
  2. Trade Policy Uncertainty: Retaliatory tariffs may escalate beyond current levels.
  3. Domestic Demand: A weaker dollar risks recession-driven demand drops at home.

The Mexico Paradox: When Weak Meets Weaker

Now, let’s talk Mexico – our dairy industry’s favorite customer and current political punching bag. Here’s where currency chaos gets really interesting. The peso’s taking a beating too, which means Mexican buyers have less purchasing power for our dollar-priced dairy.

Krysta Harden, CEO of the US Dairy Export Council, cuts through the noise: “Mexico imported .47 billion in US dairy in 2024 – a record high. But with tariffs looming, we need to focus on essentials, not luxury items.”

Farmer Perspective
“We’re shifting to bulk milk powder and butter, but tariffs are still eating into margins. The dollar drop helps, but it’s not enough.” – Juan Perez, California Dairy Exporter (USDEC Trade Report, 2025)

The China Syndrome: Trade War Redux

Just when you thought US-China trade relations couldn’t get more complicated, here we go again. Beijing’s slapping 10-15% tariffs on US agricultural products, including dairy, starting March 10, 2025. It’s like watching a bad movie sequel – same plot, higher stakes.

But here’s the twist: that weakening dollar might just be the secret weapon US dairy never knew it needed. Even with the tariff handicap, certain American dairy products could stay in the game, especially in the premium market where quality trumps price sensitivity.

The Home Front: America’s Dairy Dilemma

While we’re busy counting our export pennies, let’s not forget where most of our milk actually goes – right here at home. A staggering 84% of US milk production never leaves American soil. That means domestic market health isn’t just important – it’s everything.

Here’s the rub: that weak dollar that’s helping exports is also making imports more expensive, potentially pushing America towards a recession if consumers tighten their belts. Recent retail data shows Americans are already watching their wallets, with sales barely inching up 0.2% in February after a 1.2% nosedive in January.

But there’s a silver lining for domestic dairy producers. As foreign dairy products become pricier, local options start looking a lot more attractive. It’s like a “Buy American” campaign, courtesy of the currency markets.

The Bullvine’s Bottom Line: Adapt or Get Milked Dry

So, what’s a savvy dairy farmer to do in this economic maelstrom? The Bullvine’s got your back with some hard-hitting strategies:

First, look beyond the usual suspects. While Mexico and China play tariff tug-of-war, markets in Southeast Asia, Africa, and the Middle East are hungry for quality dairy. Time to redraw your export map.

Second, premium is the new normal. In a world where currency advantages can evaporate overnight, quality is your best defense. Invest in products that command loyalty beyond price.

Third, hedge like your farm depends on it – because it does. With volatility the only constant, smart financial instruments are no longer optional. They’re survival tools.

Fourth, keep your ear to the ground and your eyes on Washington. In this climate, today’s policy tweet could be tomorrow’s market earthquake. Stay informed, stay ahead.

Finally, diversify or die. If this currency-tariff rollercoaster has taught us anything, it’s that putting all your milk in one market is a recipe for disaster. Spread those risks like you spread your fertilizer – liberally and strategically.

Learn more:

  1. TRUMP’S 250% DAIRY TARIFF THREAT: What’s Really at Stake for Your Farm
    Breaks down the complexities of U.S.-Canada dairy tariffs, quota utilization, and the hidden realities behind political rhetoric threatening farm profitability.
  2. U.S. Dairy Exports Shatter Billion-Pound Barrier
    Explores record-breaking 2024 export volumes, Mexico’s dominance as a buyer, and how cheese exports now drive global market expansion.
  3. How the Dollar’s Fall Boosts U.S. Dairy Exports and Challenges Trade with Mexico
    Analyzes currency-driven export advantages, peso volatility, and strategies to leverage dollar depreciation while navigating Mexican market risks.

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Trade War Escalates: EU Announces $28 Billion In Tariffs Hitting US Dairy

Thursday, March 13th, 2025

EU slaps $28B in tariffs on US goods, including dairy. But is this trade war a blessing in disguise for American dairy farmers? The answer may surprise you.

EXECUTIVE SUMMARY: The EU’s announcement of $28 billion in counter tariffs on US goods, including dairy products, adds another layer of complexity to an already turbulent global trade landscape for American dairy producers. While these tariffs threaten established trade flows, USDA data shows US dairy exports remain strong, with projections reaching $8.5 billion for fiscal 2025. The article reveals a nuanced picture of US-Canada dairy trade, highlighting underutilized quotas and complex market access issues. Despite challenges, some industry leaders see the current trade tensions as an opportunity to address longstanding imbalances, particularly with the EU. The piece offers practical strategies for dairy producers to navigate this volatile environment, emphasizing the importance of understanding regional impacts, implementing layered risk management, and maintaining production flexibility.

KEY TAKEAWAYS:

  • EU announces $28B in counter tariffs on US goods, including dairy, amid ongoing global trade tensions
  • USDA projects strong US dairy exports for 2025 despite trade challenges, forecasting $8.5 billion
  • US dairy exporters currently utilize only 42% of their available tariff-free quota to Canada, revealing complex market access issues beyond headline tariff rates
  • Industry experts recommend tailored risk management strategies and production flexibility to navigate trade volatility
  • Some US dairy leaders view trade tensions as an opportunity to address longstanding market access imbalances, particularly with the EU
dairy tariffs, US dairy exports, trade tensions, global dairy market, dairy industry challenges

The European Union has announced sweeping counter-tariffs targeting $28 billion worth of American goods, including dairy products. This latest development adds to mounting trade pressures facing US dairy producers, who are already navigating trade tensions with Canada and China. With multiple trading partners implementing restrictions simultaneously, US dairy exports face unprecedented challenges in global markets.

DAIRY INDUSTRY CAUGHT IN CROSSFIRE OF GLOBAL TRADE TENSIONS

The global dairy trade landscape is experiencing unprecedented turbulence as the European Union becomes the latest trading partner to announce retaliatory measures against the United States. This EU announcement creates a complex trade environment where multiple major US dairy export markets implement trade barriers simultaneously.

European Commission President Ursula von der Leyen announced the EU will impose tariffs on 26 billion euros ($28 billion) worth of US goods – with dairy products specifically named alongside soybeans, almonds, distilled spirits, and other items.

“We deeply regret this measure. Tariffs are taxes. They are bad for business, and even worse for consumers,” von der Leyen stated during the announcement. “These tariffs are disrupting supply chains. They bring uncertainty to the economy. Jobs are at stake. Prices will go up. In Europe and the United States.”

The timing couldn’t be more challenging for American dairy producers, who shipped $8.02 billion in dairy exports globally in fiscal 2024 and are projected to reach $8.5 billion in fiscal 2025, according to USDA data released in February 2025. This projection was raised by $100 million from earlier forecasts “on increased price competitiveness for US exports of cheese and butter, with robust demand for those products in North America, South America, and the Middle East/North Africa.”

US-CANADA DAIRY RELATIONSHIP: A COMPLEX REALITY

While much political rhetoric has focused on Canadian dairy barriers, official data reveals a more nuanced picture. According to the International Dairy Foods Association, the US exported more than $1 billion of dairy products to Canada in 2022, making it the second-largest market for US dairy exports.

However, US dairy exporters face a complex system of Tariff Rate Quotas (TRQs) when selling to Canada. Under the USMCA agreement negotiated during the Trump administration, Canada agreed to eliminate tariffs on specific quantities of US dairy imports across 14 categories. However, official data shows that US exporters utilize only 42% of their available tariff-free quotas, with 9 of the 14 TRQs falling below half the negotiated value.

This limited utilization suggests the primary challenges for US dairy exports to Canada may lie beyond the headline-grabbing 200%+ tariff rates, which only apply after these quota limits are reached. As Becky Randall, senior vice president of trade and workforce policy at the International Dairy Foods Association, explained: “We don’t love the tariffs, but the main issue is that we can never fill the quota, to begin with,” due to what she describes as Canada’s administrative strategies that limit US market access.

EU-US DAIRY TRADE IMBALANCE

DirectionAnnual Value (USD)
EU to US$3 billion
US to EU$115 million

The table above illustrates the significant trade imbalance in dairy products between the European Union and the United States, which has persisted despite the US generating billions in global dairy exports. This disparity helps explain why some US dairy officials see the current trade tensions as an opportunity to address longstanding market access issues.

PRACTICAL STRATEGIES FOR DAIRY PRODUCERS AMID TRADE TURMOIL

For American dairy producers navigating this volatile trade environment, University of Wisconsin dairy economists have been modeling impacts and identifying practical approaches:

First, assess your operation’s specific exposure to export markets. With nearly one-fifth of US dairy components exported (mostly nonfat solids), understanding how your milk utilization might be affected by shifting trade flows is critical. Operations selling to processors heavily involved in export markets face risks different from those supplying primarily domestic channels.

Second, implement a layered risk management approach. Leonard Polzin from the University of Wisconsin suggests dairy producers consider the combined impacts of changing trade conditions, labor costs, and domestic consumption patterns. Their economic models show program cuts to nutrition programs like SNAP could reduce domestic dairy demand by approximately 4%, creating additional pressure beyond export challenges.

Third, analyze regional production economics carefully. Dr. Charles Nicholson’s modeling at the University of Wisconsin has identified significant differences in how trade disruptions affect different dairy production regions, with some areas maintaining more substantial margins despite trade challenges.

Fourth, maintain flexibility in production planning. USDA projects increased US dairy exports for 2025 despite trade challenges, and the fundamental global demand for dairy remains strong. Producers who can navigate the near-term market volatility while maintaining production capacity will be positioned to benefit when trade conditions normalize.

THE PATH FORWARD: NAVIGATING DAIRY’S NEW NORMAL

For forward-thinking dairy producers, this period of trade disruption demands both defensive positioning and strategic vision. Jim Mulhern, former president of the National Milk Producers Federation, emphasized the importance of enforcing trade agreements: “We must utilize USMCA’s enforcement mechanisms to bring home its hard-fought wins for America’s dairy farmers.”

According to the International Trade Commission, proper implementation of USMCA provisions could increase US dairy exports by more than $314 million annually – but realizing this potential requires vigilant enforcement of market access provisions.

As this situation unfolds, The Bullvine will continue monitoring developments and providing actionable intelligence for dairy producers navigating these turbulent trade waters. The dairy industry has weathered numerous challenges throughout its history – from regulatory changes to shifting consumer preferences – and has consistently emerged stronger through adaptation and innovation. This trade confrontation represents another challenge to test the industry’s resilience and creativity.

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GLOBAL DAIRY MARKETS ROCKED: US-China-Canada Tariff War Sends Shockwaves Worldwide

Wednesday, March 5th, 2025

Global dairy markets in turmoil as US-China-Canada tariff war erupts. Find out how this trade clash impacts milk prices and farm incomes worldwide.

EXECUTIVE SUMMARY: A sudden escalation in trade tensions has rocked the global dairy industry, with Canada and China imposing retaliatory tariffs on US dairy products and Mexico expected to follow suit. These measures target over 40% of US dairy exports, threatening to disrupt international trade flows and pressure milk prices worldwide. The situation creates both challenges and opportunities for dairy producers globally, potentially reshaping market dynamics and competitive landscapes. While US farmers face immediate export barriers, European and Oceania producers may find new market openings. However, the long-term consequences could lead to a fundamental restructuring of global dairy trade patterns, affecting producers across all major exporting regions.

KEY TAKEAWAYS:

  • Retaliatory tariffs from Canada (25%) and China (10-15%) now target US dairy exports, with Mexico likely to announce similar measures soon.
  • Over $4 billion in annual US dairy exports are at risk, potentially flooding domestic markets and pressuring global milk prices.
  • European and Oceania dairy exporters may find short-term opportunities to gain market share, particularly in China.
  • The crisis highlights the risks of export dependency and may accelerate industry consolidation and market diversification efforts.
  • Global dairy trade flows could see significant long-term restructuring as markets adjust to new competitive realities.
global dairy trade, tariff war, US dairy exports, agricultural trade dispute, international dairy markets

The global dairy landscape shifted dramatically overnight as Canada and China announced substantial retaliatory tariffs on US dairy products, with Mexico poised to follow suit by Sunday. This rapidly escalating trade conflict threatens to disrupt international dairy flows, potentially creating ripple effects for producers worldwide—from European exporters eyeing new opportunities to New Zealand farmers watching for price impacts across Asian markets.

THE HARD TRUTH: MAJOR TRADE ROUTES BLOCKED

Here’s the unvarnished truth about yesterday: The Trump administration implemented sweeping 25% tariffs on goods from Canada and Mexico and increased levies on Chinese imports to 20%. The response was swift and targeted, and trade partners knew precisely where to hit back.

Canada didn’t waste a minute announcing that CA$30 billion (US$20.7 billion) worth of US goods would face reciprocal 25% tariffs. Dairy products were prominently featured on their hit list. Everything from yogurt to buttermilk faces barriers that make US products significantly less competitive north of the border.

China followed suit with its punch to the global dairy markets, declaring that US agricultural products would face 10-15% tariffs beginning March 10, with dairy explicitly targeted at 10%. Beijing allows a brief grace period for shipments already en route—cargoes shipped before March 10 and arriving before April 12 won’t incur the additional tariffs. That window gives exporters weeks, not months, to adjust to a dramatically altered market landscape.

Suppose Mexico, Canada, and China represent more than 40% of all US dairy exports. That’s one day’s weekly worth of milk on America’s dairy farms. Milk will soon need to find alternative destinations or flood domestic markets, creating potential competitive pressure for dairy producers worldwide.

“This doesn’t look like a full-scale trade war just yet, but it could be heading that way,” warns Kang Wei Cheang, an agriculture broker at StoneX in Singapore. “China’s actions suggest they want to keep things from spiraling out of control, but the real question is whether the US is willing to negotiate.”

CountryAnnual Export Value (2024)Key Product Dependence% of Total U.S. Exports
Mexico$2.47 billionLeading destination for US skim and non-fat powderTop market for U.S. dairy overall
Canada$1.14 billionRecord imports from US in 2024Second largest dairy trade partner
China$500-800 million (recent years)Major market despite 2024 declineStrategic growth market
Combined TotalOver $4 billion More than 40% of all U.S. dairy exports

MARKET IMPACT: GLOBAL DAIRY PRICES FACE PRESSURE

When approximately 18% of America’s milk production suddenly faces significant barriers to leaving the country, the implications extend beyond US borders. The American dairy industry has invested over $8 billion in new processing capacity that will come online in the next few years—a capacity that depends on continued export growth. With three significant markets simultaneously imposing tariffs, export growth is seriously jeopardized.

The timing couldn’t be worse for international dairy markets. In 2024, the US dairy industry celebrated its second-highest export year, with foreign trade reaching .2 billion—a 3 million increase over 2023. However, those gains now face significant erosion as tariffs make US dairy products less competitive in key markets.

The situation creates opportunities for European and Oceania dairy exporters to capture market share, particularly in China, where demand growth remains strong despite recent volatility. However, increased competition in third-country markets could emerge if US exporters attempt to redirect volumes previously destined for Canada, Mexico, and China.

ScenarioGlobal Market ImpactUS Farm-Level ConsequenceInternational Effect
Short-term tariffsTemporary price volatilityCash flow challengesOpportunity for competing exporters
Medium-term tariffsReshuffling of global trade flowsSignificant margin pressurePrice pressure in alternative markets
Long-term tariffsPermanent shifts in market accessAccelerated farm consolidationRestructured global dairy trade patterns

HISTORICAL CONTEXT: LESSONS FROM PREVIOUS TRADE DISPUTES

Similar scenarios have had far-reaching consequences. During the previous US-China trade war during President Trump’s first term, Beijing imposed tariffs as high as 25% on American farm products, including soybeans. As a result, American soybean shipments fell almost 80% over two years, creating opportunities for Brazilian exporters while restructuring global oilseed trade patterns.

The current situation’s comprehensive scope, with simultaneous retaliatory actions from multiple major trading partners, makes it potentially more severe. During previous disputes, dairy exporters could pivot to alternative markets when one destination implemented tariffs. Today’s scenario offers few escape routes, with key markets all imposing barriers simultaneously.

The hard-won market positions developed by US exporters will be difficult to reclaim once European and New Zealand competitors strengthen their relationships with buyers. This situation creates opportunities and challenges for dairy producers worldwide as traditional trade flows are disrupted and new patterns emerge.

COMPETING PERSPECTIVES: LEGITIMATE GRIEVANCES OR SELF-INFLICTED WOUNDS?

Let’s be clear – there are legitimate grievances with trading partners. According to Michael Dykes, president and CEO of IDFA, “For too long, our exports to Canada have yet to fulfill the promises of the U.S.-Mexico-Canada Agreement (USMCA) because Canadian policies continue to prevent American exporters from filling their tariff-rate quotas.”

However, the International Dairy Foods Association has urged the Trump administration to “quickly resolve the ongoing tariff concerns with Canada, Mexico, and China,” emphasizing these countries’ status as America’s top agricultural trading partners. Their statement acknowledges the existing barriers but warns that “prolonged tariffs will further diminish market access” rather than solving the underlying problems.

On Monday, Canada’s finance minister, Dominic LeBlanc, said that imposing tariffs would be “a mistake” and that his country “is ready to respond to any of these scenarios.” Meanwhile, Mexico’s president, Claudia Sheinbaum, suggested that “another tariff would follow one tariff in response.” However, she indicated that Mexico was prepared to cooperate on migration and drug trafficking issues.

STRATEGIC CONSIDERATIONS FOR DAIRY PRODUCERS WORLDWIDE

For dairy producers and processors globally, this trade disruption necessitates strategic reconsideration:

  1. Assess market exposure. Understand precisely how dependent your business is on markets affected by these tariffs, either directly or through secondary effects.
  2. Identify emerging opportunities. As traditional trade flows face disruption, new openings may emerge for suppliers positioned to fill gaps.
  3. Monitor price signals carefully. Global commodity prices will likely reflect shifting trade patterns, potentially creating risks and opportunities.
  4. Watch for policy responses. Before China’s tariffs were announced, US Agriculture Secretary Brooke Rollins said earlier this week that American farmers would soon start receiving an initial tranche of $30 billion in funding approved by Congress to fight a market downturn. Other nations may implement similar support measures.
  5. Consider market diversification. The current situation highlights the risk of overreliance on specific export destinations, emphasizing the value of a diversified market approach.

THE BIGGER PICTURE: STRUCTURAL CHANGES IN GLOBAL DAIRY TRADE

This crisis forces a fundamental reassessment of global dairy trade patterns. For decades, the US dairy industry has transitioned from a domestic focus to an export orientation. Since the early 2000s, its exports have nearly tripled, making it the world’s third-largest dairy exporter, behind New Zealand and the European Union.

Despite recent volatility, Chinese demand remains a critical piece of the long-term export puzzle. US dairy exports to China fell in 2024, marking the lowest year since 2020. Demand also remains soft in key Southeast Asian markets, including the Philippines, Vietnam, and Malaysia – illustrating the challenges facing all global exporters.

The tariff situation occurred when global dairy markets were already experiencing significant uncertainty. Recent Fonterra Global Dairy Trade (GDT) auctions have shown strengthening prices, but potential disruptions to US export flows could create additional volatility as markets adjust to new trade patterns.

THE BOTTOM LINE: GLOBAL MARKETS SEEK NEW EQUILIBRIUM

The coming days will be critical. Mexico is expected to announce its retaliatory measures by Sunday, potentially targeting dairy exports as part of its response. Meanwhile, the administration could still announce exemptions that might spare dairy from the worst impacts.

One thing’s specific: Global dairy has recently entered one of its most challenging market environments. The US dairy industry, which supports over 3.2 million jobs and pumps almost $800 billion into the US economy, faces significant headwinds from these tariff measures. The implications will extend to dairy producers worldwide as markets adjust to new trade realities.

The situation may create opportunities for European dairy exporters, particularly from Ireland, France, and the Netherlands, to strengthen their positions in the Chinese market. New Zealand and Australian producers may similarly find openings in markets historically dominated by US suppliers. However, increased competition in third-country markets remains risky as US exporters seek alternative destinations for products previously bound for Canada, Mexico, and China.

The industry’s recent export success – with US dairy reaching $8.2 billion in 2024 – demonstrates the tremendous global demand for dairy products. As Michael Dykes noted, “Our industry is poised to become the world’s leading supplier of dairy products thanks to the resilience and innovation of the American dairy industry.” Navigating through this tariff storm will require all that resilience and innovation – but the underlying strength of global dairy demand remains unchanged.

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China Slaps 10% Tariff on US Dairy: Exporters Face New Market Challenges as Trade War Heats Up.

Tuesday, March 4th, 2025

China will impose a 10% tariff on US dairy products starting March 10 as the trade war intensifies, but it will offer a temporary exemption for shipments already en route. American dairy farmers face immediate market challenges as their export competitiveness suffers in the crucial Chinese market. At the same time, feed crop tariffs could create complex ripple effects through the dairy supply chain.

EXECUTIVE SUMMARY: China’s Customs Tariff Commission has announced a 10% additional tariff on US dairy products effective March 10, creating significant challenges for American dairy exporters. The measures, part of broader agricultural retaliation against recent US tariff increases, include a critical exemption for shipments already in transit before the implementation date. Beyond agriculture, China has also placed defense companies on its unreliable entity list, including Lockheed Martin divisions, demonstrating a multi-pronged response to US trade actions that threaten hard-won market access for American dairy producers.

KEY TAKEAWAYS:

  • China will implement a 10% additional tariff on US dairy products beginning March 10, 2025
  • Shipments already en route before March 10 and arriving by April 12 are exempt from the new tariffs
  • The new tariffs will be added to existing rates rather than replacing them
  • Feed ingredients, including corn and soybeans, also face tariffs, potentially affecting dairy input costs
  • China has also restricted the activities of 10 US defense companies in a parallel non-agricultural action
  • The Chinese Commerce Ministry cited damage to “the fundamental basis of economic and trade cooperation” in its announcement.
China tariffs, US dairy exports, trade war, agricultural retaliation, dairy industry impact

In a direct response to President Trump’s tariff increases, China’s Customs Tariff Commission announced Tuesday it would implement a 10% additional levy on American dairy products beginning March 10, creating immediate challenges for US dairy exporters attempting to maintain their foothold in this crucial Asian market. The announcement explicitly identifies dairy among several agricultural categories facing new trade barriers, with the Commerce Ministry confirming these measures come in retaliation for the US raising tariffs on Chinese imports to 20% on March 4.

China’s Targeted Agricultural Tariffs Take Aim at US Farmers

China’s Commerce Ministry officially declared that American chicken, wheat, corn, and cotton imports will face an additional 15% tariff. Sorghum, soybeans, pork, beef, seafood, fruits, vegetables, and dairy products will face a 10% increase. These tariffs will be added to existing rates rather than replaced, potentially creating cumulative duties that significantly disadvantage US products compared to international competitors.

The announcement includes one critical provision that may provide temporary relief: shipments already en route won’t face the additional duties. Specifically, “For imports that have been shipped from the port of origin before March 10, 2025, and are imported into China between March 10 and April 12, the additional tariffs imposed as specified by this announcement shall not be levied,” according to the Customs Tariff Commission’s official statement.

Immediate Market Implications for Dairy Exporters

The timing of these tariffs creates immediate complications for dairy processors and cooperatives with shipments already in transit or contracts recently signed. While the transit exemption provides some breathing room, dairy exporters still face difficult decisions about pricing strategies and customer communications for shipments scheduled after the grace period ends in mid-April.

China has been a growing destination for US dairy exports in recent years, with particular strength in specialized ingredients, whey products, and cheese. These products now face significant price disadvantages compared to competitors from countries like New Zealand, Australia, and the European Union, which aren’t subject to the same additional tariffs. The pricing disparity creates immediate competitive challenges for US dairy products in a market where price sensitivity remains high and alternative suppliers stand ready to fill any void.

Beyond Agriculture: China Expands Trade Restrictions

In a parallel move, Beijing has added 10 US companies to its “unreliable entity list,” which prohibits these firms from participating in China-related import or export activities and restricts them from making new investments. The targeted companies include defense firms such as Lockheed Missiles Fire Control, Lockheed Martin Aeronautics, and Lockheed Martin Missile System Integration Lab. According to the Commerce Ministry, senior executives from these companies will also face entry bans to China, and their work permits and residency permissions will be revoked.

This multi-pronged approach demonstrates China’s strategic targeting of agricultural communities and defense industries in its response to US tariff actions, continuing a pattern established during previous trade disputes.

Historical Context and Market Trends

The additional tariffs come against a backdrop of declining agricultural exports to China. US agricultural shipments to China fell for the second consecutive year in 2024, continuing a downward trend that began with the initial trade disputes during President Trump’s first term.

Since these disputes began, China has systematically worked to reduce its dependence on US agricultural imports. Beijing has pursued a dual strategy of diversifying its agricultural supply sources while boosting domestic production to achieve greater food security. For dairy, this has meant increased investment in domestic dairy operations while strengthening trade relationships with alternative suppliers like New Zealand, which enjoys preferential access under existing trade agreements.

Potential Feed Cost Implications

For dairy farmers, the impact of these tariffs extends beyond direct export opportunities. The Chinese measures also target key feed ingredients, including corn and soybeans, potentially creating complex ripple effects throughout agricultural supply chains. Should these tariffs significantly reduce US exports of these commodities, domestic prices could face downward pressure, potentially providing some relief on input costs for dairy operations during a period of export challenges.

The Chinese Commerce Ministry characterized the US tariff increases as “undermining the multilateral trading system, exacerbating the burden on American businesses and consumers, and damaging the fundamental basis of economic and trade cooperation between China and the US.” This official position suggests continued friction rather than a quick resolution to the trade dispute.

Industry Response and Strategic Considerations

Industry organizations are already mobilizing to assess the full implications of these new tariffs and advocate for government support measures to offset potential market losses. Previous rounds of agricultural tariffs have typically triggered federal assistance programs, though the specific nature and timing of any potential support remain uncertain at this early stage.

The tariffs arrive at a challenging time for many dairy operations, which are already navigating volatile input costs and evolving consumer preferences. Processors with diversified export portfolios may be better positioned to weather this disruption by redirecting products to alternative markets, though such pivots typically involve price concessions and additional logistical complexities.

These tariffs underscore the importance of individual dairy farmers working closely with their cooperatives or processors to understand how market access changes might affect milk pricing and volume commitments in the coming months. Operations with high debt loads or tight margins may face particular challenges if the tariffs trigger broader milk price adjustments throughout the domestic market.

Conclusion: Navigating Uncertain Trade Waters

The imposition of 10% additional tariffs on US dairy exports to China represents a significant market disruption that will require careful navigation by all segments of the dairy value chain. While the immediate effects will be most directly felt by exporters and processors with active Chinese business, the potential for broader market adjustments means all dairy producers should monitor developments closely and maintain open communication with their milk buyers about potential implications.

As the dairy industry adapts to this latest market challenge, collaboration between producers, processors, and industry organizations will be essential to developing coordinated responses that protect the long-term competitiveness of US dairy in global markets. The resilience demonstrated by the sector during previous trade disruptions suggests the industry has developed valuable experience in navigating such challenges. However, each new round of tariffs brings unique complexities requiring fresh strategic approaches.

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How U.S. Dairy Exports to Southeast Asia Dropped 20%: Challenges and Opportunities

Wednesday, January 8th, 2025

Find out why U.S. dairy exports to Southeast Asia fell 20% in November. What challenges and opportunities await? Dive into the insights.

Summary:

In November, US dairy exports to Southeast Asia took a surprising dive, dropping 20% compared to last year, mainly due to a 43% decrease in nonfat dry milk sales—the lowest since mid-2019. Despite this, exports of other products like milk, cream, and cheese grew, showing both challenge and potential. As Southeast Asia made up about 20% of US dairy exports in 2023, maintaining this market is essential. US producers face tough competition, especially in pricing. Meanwhile, the growing middle class in the region offers a chance for specialized products. New Zealand has seized opportunities in this shifting market by keeping prices competitive. For US dairy to succeed, there’s a need for trade deals and products that fit local tastes, such as lactose-free and organic options. Freedom in trade could also help reduce tariffs.

Key Takeaways:

  • U.S. dairy exports to Southeast Asia decreased by 20% in November, indicating a need for competitive strategy adjustments.
  • The significant 43% drop in nonfat dry milk sales was a major factor in the overall decline of exports.
  • New Zealand has capitalized on the U.S. market gap, increasing their nonfat dry milk exports to the region.
  • Positive trends noted in other dairy products like fluid milk, cream, and cheese, showcasing potential growth areas.
  • Southeast Asia remains a critical market for U.S. dairy, with its growing middle class potentially boosting demand for value-added products.
  • Adaptation and innovation are crucial for U.S. dairy producers to regain and expand their market share in Southeast Asia.
US dairy exports, Southeast Asia dairy market, New Zealand dairy competition, NDM export decline, dairy industry strategies, premium dairy products, trade agreements dairy, competitive pricing dairy, milk cream cheese exports, lactose-free organic dairy.

A few short years ago, US dairy farms were doing very well. They were sending everything from cheese to butter to Southeast Asian markets, which would make up almost 20% of their exports in 2023. But by November 2024, things had changed. Exports dropped by 20%, surprising industry professionals. This isn’t just a number; it’s a significant change that makes us wonder what the future holds for American dairy farmers.

ProductNovember 2023 (Million Pounds)November 2024 (Million Pounds)Change (%)
Total Dairy Exports84.2567.40-20%
Nonfat Dry Milk (NDM)47.9027.30-43%
Fluid Milk and Cream13.0013.917%
Cheese23.3524.987%

Southeast Asia: A Crucial Market Battleground for US Dairy Producers 

Several years ago, the U.S. was a major player in the world dairy market, with Southeast Asia being a key area. Because of its changing diets and growing population, the area is a great place for American dairy farmers to sell their products. There are many chances to make money in places like Vietnam, the Philippines, Indonesia, Thailand, and Malaysia. Many people are now middle-class thanks to economic growth, which has raised the demand for healthy foods like dairy. As the economy improves, people are more interested in Western food styles. US dairy farmers have taken advantage of this trend.

However, the United States has recently sent less dairy to Southeast Asia. As of November, all exports were down 20%, and sales of nonfat dry milk were down an impressive 43%. New Zealand and other countries with low prices have taken market share from the United States. The lower prices of European and Oceanian nonfat dry milk than those in the US suggest a shift in regional preferences or economic considerations.

The significant drop in US dairy exports to Southeast Asia is not just a short-term problem; it could potentially jeopardize the US’s ability to sell goods in this crucial market. Maintaining a strong presence is paramount because this region accounts for almost 20% of US dairy exports. If the downward trend continues, it could severely hamper the growth of the US dairy industry. Understanding the implications of these more significant changes is crucial for devising effective strategies for production and pricing. Dairy farmers and industry stakeholders must adapt to these changes and develop new strategies to capitalize on the vast market potential of Southeast Asia.

Nonfat Dry Milk (NDM) Faces a Significant Setback: Navigating Challenges in Fierce Global Competition 

Nonfat dry milk (NDM) exports to Southeast Asia dropped by 43%, which has caused the US dairy industry to be nervous. This is primarily due to prices and tough competition. Since July, the price of NDM in the US has been higher than in Europe and Oceania. Due to this price gap, consumers seeking products will seek better bargains elsewhere.

So, why are prices going up in the US? The costs of making things like feed and energy have increased. In contrast, costs have stayed low in other places, allowing companies to offer lower prices and gain a larger market share.

Europe and Oceania have used this to their advantage. They’ve sold more NDM because the prices are better, making up ground where the US is losing it. Losing market share is not fun, but it sends a strong message about changing global trade.

The good thing is that it’s an opportunity to change. “How can we cut production costs without losing quality?” is a question that US producers might ask. The US could get ahead of the competition if it faced these problems instead of trying to avoid them. The drop in NDM exports is a significant setback. Still, it also allows the company to rethink its plans and remain a significant global dairy market player.

New Zealand’s Strategic Moves: Lessons from the Kiwi Dairy Playbook

The case of New Zealand’s successful exploitation of the drop in US NDM exports to Southeast Asia underscores the changing dynamics of the global dairy market. New Zealand swiftly capitalized on the US’s NDM issues, offering lower prices to attract Southeast Asian buyers. This is a crucial lesson for American dairy farmers, highlighting the need to monitor global price trends and adjust prices to remain competitive, particularly in sensitive markets like Southeast Asia.

New Zealand has maintained competitive prices to attract Southeast Asian buyers. European and Australasian NDM prices are lower than US prices. Still, New Zealand has used its lower prices to attract Southeast Asian buyers. That’s why it’s essential to monitor price trends worldwide. The US might have to change its prices to stay competitive, especially in Southeast Asia and other sensitive markets.

Another reason is New Zealand’s strong trade ties in the area. Even though there is competition, these long-lasting ties help the country maintain and grow its market share. Building more substantial trade agreements to ensure reliable market access would suit the US dairy industry.

New Zealand has also made products that meet the market’s needs well. They’ve changed what they sell to suit Southeast Asian tastes, ensuring their exports do well. US dairy farmers could make more money if they knew about and catered to people’s tastes in different areas.

New Zealand’s well-run supply chain and logistics also play a big part. To stay competitive, you must deliver fresh products on time and reasonably priced. The United States can use what it has learned to improve its supply chains. This could be done with technology or by working with logistics companies.

In Southeast Asia, the business world is challenging but full of opportunities. Opportunities are enormous because the middle class is growing, and people’s diets are changing. New Zealand’s success shows how important it is to be flexible, offer competitive prices, build relationships, and know what the market wants. The US must use these plans to regain its position in this critical area.

Uplifting Market Dynamics: Fluid Milk, Cream, and Cheese Showcase Promising Growth for US Dairy Farmers

It’s good news for US dairy farmers and exporters that more milk, cream, and cheese are being sent abroad. Nonfat dry milk (NDM) exports are going down, but these goods are going up, which can help make up for it. Fluid milk and cream exports increased by 7% in November, which is in line with rising demand in the area. Thailand and the Philippines are becoming more interested in buying US goods, which shows that consumer tastes are changing and could lead to long-term partnerships.

Cheese exports also increased by 7%, a testament to the adaptability of the US dairy industry. This progress shows how flexible and competitive the industry is. As more cheese-making facilities open, the focus must shift to these products to keep exports to Southeast Asia high and compensate for losses caused by lower NDM sales.

Targeting areas with growing demand for premium dairy products can help compensate for revenue drops in the NDM segment, ready to capitalize on these changes by offering products like fortified drinks, lactose-free milk, and organic options that suit Southeast Asian tastes and health trends.

Freedom of trade agreements could also lower tariffs and make it easier for US dairy farmers to sell their products in other countries. If American dairy farmers use these chances wisely, they can meet and even exceed the needs of Southeast Asian consumers. To predict and prepare for future growth in the dairy trade, it’s essential to be aware of these economic changes. This will lead to shared success.

Global Dairy Game: Navigating the Competitive Landscape of Southeast Asia

The dairy market worldwide is busy and competitive. New Zealand and the EU are two big players changing the rules, especially in Southeast Asia.

  • New Zealand’s Plan: New Zealand is close to Southeast Asia, which helps its exports. It has a strong dairy industry and has done a good job of marketing its nonfat dry milk (NDM) and setting its prices to be competitive with US products. Thus, it has increased the amount of NDM it exports, which means it is taking market share away from the US.
  • Strategy of the European Union: The European Union uses trade agreements to lower tariffs and make it easier for people to access its markets. The EU is more common in Southeast Asia because it knows what consumers want and builds long-term relationships. However, this has decreased its share of the US market.

New Zealand and the EU focus on quality, price, and competitive partnerships. These changes the market and put US producers to the test. These countries are doing more, which shows that the US needs to develop new ideas and change its strategies to strengthen its position in these critical markets.

Navigating Headwinds: The Multifaceted Challenges Facing US Dairy Exports to Southeast Asia

High prices, trade barriers, and logistics problems make it hard for the US to send dairy to Southeast Asia:

  • US goods usually cost more than cheaper ones from Europe and Oceania because they have to be made more expensively. New Zealand and Europe often have the upper hand because Southeast Asian buyers care a lot about price. 
  • The rules regarding trade in Southeast Asia can be complex to understand. It may be challenging for US goods to enter these markets because of tariffs, quotas, and standards.  The lack of trade agreements can also affect this entry. Getting from the United States to Southeast Asia is a long trip that can be hard to track. 
  • Delays, problems at the port, and traffic jams can make delivery times and costs longer and more expensive.
  • In addition, keeping food fresh on such long trips can be challenging.

US exporters must revamp their strategies to overcome these challenges and protect their market position in Southeast Asia.

Navigating Opportunities: Harnessing Growth Within Southeast Asia’s Dynamic Dairy Market

There is a lot of competition in the US dairy industry worldwide, but Southeast Asia is a place where it could grow. Increasing exports requires the development of new strategies and partnerships. Here are some ways the US can be more present in this exciting area. Making New Products: The evolving preferences in Southeast Asia present an opportunity for the creation of novel products to cater to the changing tastes in the region. US dairy companies can leverage this trend to introduce innovative products such as exotic cheeses, flavored beverages, or lactose-free options tailored to health-conscious consumers. Better advertising: It’s essential to understand Southeast Asian customers. By tailoring their ads, US dairy brands can connect with local customers better. To achieve this, US dairy brands can leverage digital platforms, targeted campaigns focusing on price and quality, and collaborate with local influencers to expand their reach. Building Trade Bonds: To get better market access, you must have strong relationships with local stores and distributors. Collaborating with trade groups in Vietnam, the Philippines, Indonesia, Thailand, and Malaysia can facilitate smoother trade agreements, reduce export barriers, and establish enduring connections.

The US dairy industry can turn problems into opportunities to profit by using new ideas, innovative marketing, and tact. These plans can help Southeast Asia’s economies grow and give businesses better market access.

Strategic Innovation: Reclaiming Market Presence in Southeast Asia

Southeast Asia is having a hard time with US dairy exports. So, dairy farmers and exporters need to think of new ways to get back on track and strengthen their position in this critical market. They can do it this way:

  • Better Pricing Strategies: Dr. Sarah Campbell recommends that US dairy companies price their products the same as or less than those in New Zealand. Regaining market share could mean carefully considering prices and costs. According to data, competitive pricing has worked in the past.
  • Focus on High-Quality Products: As the middle class in the region grows, so does the demand for high-quality goods. According to the International Dairy Foods Association, US companies could prioritize producing organic, fortified, or flavored products due to consumer willingness to pay higher prices.
  • Getting more known in the market: Marketing with local partners or influencers can help spread the word about your brand. Market Intelligence Analytics says digital marketing is critical because, in 2024, more than 30% of dairy purchases were made online.
  • Building Alliances: According to a report from Global Trade Partners, collaborating with local businesses can improve distribution efficiency and reduce expenses. This collaboration could also help US companies reach more people.
  • Changing Products: US dairy could be more appealing if products were changed to fit local tastes. To be successful in a niche, you need to know about cultural preferences and consumer trends.
  • Putting money into research and development (R&D): R&D can lead to new ideas that meet local and government needs. A way to get ahead might be to learn from the best players, focusing on research and development.
  • Looking at New Markets: Vietnam, Indonesia, and the Philippines are essential, but new markets like Myanmar could open up new sales opportunities for US dairy products.

Through these strategies, US dairy exporters can reclaim lost market share and explore new avenues for Southeast Asian growth. Success requires smart pricing, new products, innovative marketing, strong partnerships, customized offerings, and constant innovation. Expertise and adaptability are crucial for US dairy exporters to regain their leadership position in this ever-changing market.

The Bottom Line

To sum up, recent Southeast Asian events that affected the US dairy industry remind us of the difficulties and opportunities in today’s global market. While the decrease in nonfat dry milk sales is concerning, the increase in milk, cream, and cheese exports indicates growth potential. We must develop innovative new ideas and solid market plans to compete with New Zealand. When you adapt, you don’t just fix problems; you also take advantage of new opportunities for long-term growth. To succeed, you must know how to work with new partners in growing economies like Southeast Asia and understand how consumer tastes change. The expanding middle class presents an excellent opportunity for US dairy farmers to thrive.

Learn more:

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Bullvine Daily is your essential e-zine for staying ahead in the dairy industry. With over 30,000 subscribers, we bring you the week’s top news, helping you manage tasks efficiently. Stay informed about milk production, tech adoption, and more, so you can concentrate on your dairy operations. 

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Weekly Dairy Market Recap: Global Trends and Key Insights – Monday, 16 September 2024

Monday, September 16th, 2024

Stay ahead in the dairy market with our weekly recap. Check out key trends and stats from global markets. Ready to optimize your dairy strategy?

Summary:

Welcome to your one-stop source for global dairy market insights for the week of Monday, 16 September 2024. We’ve seen dynamic trading activity on EEX and SGX futures, notable gains in European quotations, and significant movements in cheese markets. The GDT Pulse Auction reflected modest gains, while GDT TE364 auction previews suggest stability. Danish dairy sectors are navigating production declines in national trends, and the USDA’s September WASDE report indicates tightening milk supplies ahead. Plus, US and Australian dairy exports are surging well above expectations, showcasing international solid demand. Stay tuned as we delve deeper into these trends, offering actionable insights and expert analysis.

Key Takeaways:

  • EEX futures saw a mixed performance with slight gains in butter but declines in SMP and whey.
  • SGX futures showed strength in WMP and SMP despite a minor dip in butter.
  • European quotations continued to rise, marking the sixth consecutive week of gains across all dairy products.
  • Cheese indices showed strong performance, with Cheddar and Gouda leading the increases.
  • GDT Pulse Auction reported modest gains, reflecting the dynamic nature of market activities.
  • GDT TE364 auction preview indicated stability in WMP and SMP volumes, showing no changes in total forecasted volumes.
  • The Danish dairy sector faced production declines but maintained quality metrics in milk composition.
  • USDA revised its September WASDE report, indicating a tightening milk supply due to lower cow inventory and slower milk production per cow.
  • US dairy exports surged 9.5% in July, driven by strong international demand.
  • Australian dairy exports outpaced expectations, with a significant increase of 23.0% from last year.
dairy market trends, dairy price volatility, European dairy exchange, butter price increase, skimmed milk powder trends, cheese market improvements, global dairy trade auction, US dairy exports, Australian dairy industry performance, dairy supply chain challenges

Have you ever wondered how the global dairy market volatility affects your bottom line? Staying current with these changes is crucial for dairy farmers and industry experts. Today is Monday, September 16, 2024, and in this weekly overview, we’ll look at the latest happenings in global dairy markets. Understanding market trends may help you make better manufacturing, marketing, and pricing choices. By staying on top of global dairy circumstances, you may better handle problems and exploit opportunities as they occur. In the volatile world of dairy, being proactive rather than reactive can make all the difference in your profitability and long-term sustainability. Your role in the industry is crucial, and strategic decision-making is more critical than ever.

MarketProductVolume Traded (Tonnes)Average PricePrice Change (%)
EEXButter1,320€7,687+0.3%
EEXSMP1,505€2,725-1.1%
SGXWMP11,795$3,458+0.6%
SGXSMP4,535$2,903+0.9%
EUButterVarious€7,950+0.3%
EUSMPVarious€2,588+2.2%
EUWheyVarious€812+1.5%
EUWMPVarious€4,268+2.5%

EEX Week in Review: Dynamic Trading and Mixed Market Signals

Last week, the European Energy Exchange (EEX) witnessed significant trading, with 2,825 tonnes of dairy goods changing hands. Wednesday emerged as the most considerable trade day, with activity peaking at 1,125 tons. This surge in trading volumes underscores the dynamic nature of the market, a factor that can directly influence your business decisions and strategies.

The performance of essential dairy products on the EEX was varied. Butter futures prices diverged among contracts, with the average cost of the Sep24-Apr25 strip rising 0.3% to €7,687. Skimmed Milk Powder (SMP) saw a negative trend, with the average price falling by 1.1% to €2,725 throughout the same time. Similarly, Whey fell 0.4%, ending the week with an average price of €959.

A variety of market conditions influences these price changes. The minor increase in butter prices might reflect strong demand or tighter supply. Still, the softening in SMP and whey prices could indicate plentiful supply or weak demand. Market players should pay particular attention to these patterns, which may indicate more significant alterations in dairy market dynamics.

SGX Futures Activity: Gauging Global Dairy Market Trends 

The SGX Futures activity is a crucial indicator for the global dairy industry, particularly for items such as whole milk powder (WMP), skim milk powder (SMP), anhydrous milk fat (AMF), and butter. Last week, the total volume traded on the Singapore Exchange was 16,930 tonnes, providing a comprehensive snapshot of the market’s health and potential trends. Here’s a closer look at the specifics: 

  • WMP: The standout performer on SGX, with 11,795 tonnes traded. WMP showed a slight firmness over the Sep 24-Apr25 curve, up 0.6% to an average price of $3,458.
  • SMP: Not far behind, with 4,535 tonnes traded. SMP displayed a stronger upward trend, up 0.9% over the Sep24-Apr25 contracts to settle at $2,903.
  • AMF: Traded volumes were smaller but still noteworthy, with a 0.7% rise over its Sep 24-Apr25 contracts, reaching an average price of $7,028.
  • Butter: Although a smaller volume of 600 tonnes traded, Butter was down by 0.3% over the same period, landing at an average price of $6,611.

We see some significant variances when comparing these patterns to those of the European Energy Exchange (EEX). EEX Butter futures had variable outcomes across contracts but ended with a modest gain (+0.3%) to an average price of €7,687. Meanwhile, EEX SMP fell 1.1% to €2,725. The Whey market fell 0.4% on the EEX, finishing at €959.

The SGX market demonstrated an overall increase trend for most dairy products, with a strong interest in WMP and SMP. In contrast, the EEX market had varied results, showing the nuances of the global dairy trade. These disparities illustrate the significance of regional and market-specific factors in determining price trends and trading volumes.

European Quotations on the Rise: A Detailed Analysis 

Let’s examine the current European quotes. This is the sixth week of solid momentum, with price hikes for all significant dairy products.

  • Butter
    The butter index increased by €27 (+0.3%) to €7,950, setting a new 5-year high. Dutch butter increased by €100 (1.3%) to €8,050. French butter likewise increased by €80 (+1.0%), reaching €7,850, while German butter fell by €100 (-1.2%) to €7,950. Over the previous seven weeks, the average butter price has risen by €1,285 and is currently up €3,547 (+80.6%) year on year. This substantial increase points to a robust demand rebound and a tight supply situation in the butter market.
  • SMP (Skim Milk Powder)
    Skim Milk Powder (SMP) had its sixth consecutive comeback, with the average price rising by €56 (+2.2%) to €2,588. The Dutch SMP increased by €40 (+1.6%) to €2,570, the German SMP followed suit at €2,625, and the French SMP increased by €90 (+3.6%) to €2,570. The average SMP price has increased yearly by €373(+16.8%). These improvements suggest a strong demand rebound and perhaps constraining supply in the SMP market.
  • Whey
    The whey index rose by €12 (1.5%), raising the average price to €812. Dutch whey climbed by €20 (2.3%) to €880, German whey by €10 (1.3%) to €785, and French whey by €5 (0.7%) to €770. Year on year, whey prices have risen by €174 (+27.3%). This higher trend reflects solid market fundamentals and increased demand for whey products.
  • WMP (Whole Milk Powder)
    The WMP index rose by €103 (2.5%) to €4,268. German WMP climbed by €140 (+3.3%) to €4,425, while the French index rose by €100 (+2.5%) to €4,030, and Dutch WMP gained by €70 (+1.6%) to €4,350. Year on year, the average WMP price has risen by €1,020 (+31.4%). This demonstrates a tighter worldwide market for whole milk powder, fueled by strong international demand.

The rise in these dairy product indicators indicates intense market circumstances defined by high demand and limited supply. This trend is encouraging for European dairy producers and processors but also suggests that downstream markets may face increased costs. Monitoring these pricing changes will be critical for industry stakeholders navigating this volatile market climate.

Cheese Markets Surge: Cheddar and Gouda Lead the Pack 

This week, European cheese indicators improved across the board. Cheddar Curd saw an outstanding gain of €116, or 2.5%, to €4,845. Over the last year, this index has risen by €1,144, or 30.9%. Mild Cheddar also performed well, increasing by €172, or 3.6%, to €4,893. This increases its annual gain to €1,117, representing an astounding 29.6% increase.

The Young Gouda index climbed by €78, or 1.7%, to €4,666. Young Gouda’s sales are up €1,213, or 35.1%, yearly. Similarly, the Mozzarella index rose €61, or 1.3%, to €4,653. This equates to an annual rise of €1,286, a staggering 38.2%.

What’s driving these tremendous gains? Several variables are in play. The European market has benefitted from consistent strong demand for native and imported cheese products. Strong export markets have increased prices, particularly in Asia and North America. Production expenses, including feed and labor, have increased, increasing prices. The combination of solid demand and higher production costs supports the rising trend of cheese indices.

GDT Pulse Auction: Modest Gains Reflect Market Dynamics 

The recent Global Dairy Trade (GDT) Pulse Auction PA060 witnessed moderate increases in essential items. The average winning price for Fonterra Regular C2 Whole Milk Powder (WMP) was $3,430, up $25 (+0.7%) from the previous GDT auction but $130 lower (-3.7%) than the prior pulse sale. Skim Milk Powder (SMP) achieved an average winning price of $2,800, up $70 (+2.6%) from the previous GDT auction and $120 (+4.9%) from the prior pulse event. A total of 2,209 tonnes were sold across all items, with 47 bids taking part, compared to the preceding pulse, which sold 1,972 tonnes with 51 bidders. The importance of these recent findings underscores SMP’s sustained good trajectory, with GDT and GDT pulse auctions increasing for the sixth time in a row. This trend may indicate a boost in market confidence and demand for SMP.

WMP, on the other hand, has increased somewhat, indicating a more conservative bounce, which might reflect a cautious buyer mood in the larger dairy market. The aggregate amount of items sold and the number of bids imply a constant market involvement. Still, the subtle price variations hint at divergent market dynamics for distinct dairy products. This information is critical for dairy professionals making sound judgments in a volatile market.

GDT TE364 Auction Preview: Stability in WMP and SMP Volumes Amid Market Dynamics 

Looking forward to the GDT TE364 auction, the amounts of essential items such as WMP, SMP, and cream are being closely monitored. Fonterra will offer 21,145 tonnes of WMP at this auction, matching the level of the last auction and corresponding with the most recent projection. WMP volumes will increase slightly to 22,232 tonnes for the two October auctions but will fall to 20,910 and 20,907 for the November events. This steadiness may limit any considerable price fluctuations in the near run. However, the November cut may put upward pressure on prices as Christmas demand picks up.

SMP quantities are consistent with the forecast, with no changes to TE364, keeping the market quiet and predictable. Cream group quantities are stable, with a high of 5,935 tonnes available and an annual projection of 99,895. The consistent supply of cream may avoid significant price increases, albeit this is strongly dependent on demand changes.

The overall picture indicates that the market will likely remain balanced shortly, barring any unforeseen swings in global demand or supply chain disruptions. With primary volumes staying consistent, we may not see significant price swings, creating a reasonably predictable market scenario for dairy professionals.

Danish Dairy Sector: Navigating Production Declines and Quality Metrics

According to the most recent estimates, Danish milk output in July 2024 was 493,000 tons, a 1.0% decrease from the previous year. While overall collections number 3.37 million tons, indicating a flat trend, the decrease in July is noteworthy. Milkfat content was 4.21%, with a protein level of 3.55%. This provides the month’s total milk. Solid collections fell to 38,000 tons, a 0.3% decrease from the previous year. Year-to-date, cumulative milk solid collections are 270,000 tons, a 0.2% decline from a year earlier.

Reducing milk output and solid collections might indicate a more significant problem for the Danish dairy industry. Lower production rates impact the supply chain, increasing costs for local and foreign customers. Furthermore, if these trends persist, dairy producers may need to apply efficiency measures or change herd management procedures to maintain output levels. The steady amounts of milk fat and protein signal that quality is stable, which is good news for dairy farmers concentrating on high-value products. One thing is sure: the Danish dairy business must actively watch these changes to strategically adapt to the changing production situation and prevent any market effects.

USDA’s September WASDE Report: Revised Forecasts Indicate Tightening Milk Supply Ahead

The USDA’s September WASDE report lowered its expectations for US milk output. Two thousand twenty-four projections are now at 102.5 million tonnes, down 0.2% from 2023. Production predictions for 2025 were also reduced to 103.4 million tonnes, indicating a 0.9% rise above 2024 levels. These reductions result from decreased expected cow inventory and a slow increase in milk output per cow. This slower rise in milk per cow is predicted to continue until 2025.

The revised production projection has increased cheese, butter, NDM, and whey prices, driven by recent price gains and the expectation of restricted milk supplies. Furthermore, export forecasts for fat and skim are rising owing to projected increases in dairy product exports.

US Dairy Exports Surge in July: Strong International Demand and Market Dynamics 

US dairy exports increased significantly in July, with milk equivalent exports up 9.5% over the previous year. This growth exceeds the +2.2% estimate, demonstrating worldwide solid demand for US dairy goods. Examining the various items, albeit somewhat lower than predicted, cheese exports increased by 10.1% over the previous year. However, the true standout was NFDM/SMP exports, which increased by 10.8% yearly, above expectations.

What do these numbers show? The higher-than-expected rise in exports indicates that US dairy products have a solid competitive position worldwide. Considering the present market circumstances, this development is exceptionally positive, indicating strong demand from overseas customers. The increase in NFDM/SMP exports suggests a growing dependence on these items, which might indicate a change in customer preferences or new market possibilities.

The consequences for the United States dairy business are enormous. For starters, continuous export growth may reduce local market constraints and boost milk prices, helping dairy producers throughout the country. Second, the success across product categories, such as cheese and NFDM/SMP, emphasizes the need for a diversified product range to suit changing global demands. Finally, these patterns encourage hope for the future, indicating that the US dairy sector can capitalize on its strengths in a developing international market.

Australian Dairy Exports Outpace Expectations: A Closer Look at Market Dynamics 

Australia’s dairy industry has had a strong export performance. Milk equivalent exports increased by 23.0% year on year in July, beating expectations of a -11.4% fall. This substantial export increase suggests possible changes in local demand and inventory levels.

Interestingly, although exports to China dropped by 61%, other top ten destinations showed a double-digit increase. This broad export landscape demonstrates strong demand from overseas markets despite a significant reduction in one of Australia’s top dairy customers.

Looking more closely, China’s mixed performance showed dropping data for WMP, SMP, and fluid milk but an unexpected increase in cheese, butter, and whey protein isolate imports. This slight fluctuation reflects changes in these groups’ consumption habits or stock modifications.

Domestically, flat to declining consumption rates indicate that dairy products are being reallocated to fulfill foreign demand, which may influence local market dynamics. If the current export pattern continues, domestic stockpiles may be further strained, necessitating prudent resource management.

The Bottom Line

Many vital insights emerge as we negotiate the ever-changing global dairy market scenario. The intense trading activity on the EEX and SGX reflects a lively market with minor price changes for dairy products. European quotations continue to rise, reaching new records and demonstrating solid demand. Furthermore, the cheese industry is expanding rapidly, especially for Cheddar and Gouda, which may indicate altering customer tastes. Meanwhile, the GDT Pulse Auction reveals a market battling with moderate increases and consistent volume.

The USDA’s updated predictions in the September WASDE Report indicate a tighter milk supply ahead, prompting us to oversee production and export patterns. The solid gain in US dairy exports and the unexpected spike in Australian dairy exports demonstrate the markets’ durability and flexibility. However, changeable domestic consumption patterns and complicated export dynamics, particularly with large importers like China, complicate the overall picture.

So, what does all of this imply for your business? These patterns provide valuable information that may help you make strategic choices about production planning, market positioning, and investment in new technologies. As the global dairy industry presents possibilities and difficulties, being aware and flexible will be critical for navigating this complicated environment.

How will you use market dynamics to improve your operations and remain ahead of the curve? Please share your ideas and tactics with us on the Bullvine community platform.

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