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Exports are a driver for the dairy market


Love it or hate it, the U.S. dairy industry has grown to a size where exports are an important factor in the strength of domestic milk prices. U.S. dairy producers have grown output over the years — of both volume and components — largely through improved productivity. Consumers in the U.S., while partakers of cheesy pizzas and ice cream, have not kept pace. The surplus dairy needs to go somewhere, and the export market has often been a preferred outlet to keep sales from depressing the domestic market.


Two years ago, nonfat dry milk (NDM) powder and skim milk powder (SMP) reached a record share of exports, topping 9.5% of all U.S. milk solids (on a protein-equivalent basis). The next year, 2022, also came close to that all-time high. The good news for producers is that more cheese was exported last year, returning a higher blended milk price than in 2021. Looking at the data through August of this year, we can see why U.S. milk prices have struggled to rebound in 2023 and have largely stayed below prior-year levels. Exports of cheese are down 5.6% year-to-date on a total volume basis. While that might not seem like much, it doesn’t take a lot of surplus product to move U.S. prices.


Mike North

November 14, 2023

hoards.com

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