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Dairy price pressure could be on the horizon

A dairy economist says it appears China imports were up 50 percent in April which has buoyed global dairy markets but he’s not overly bullish on future demand.

“You have the largest importer in the world growing their imports at 40-50 percent for a couple of months and it gets pretty supportive.

Nate Donnay with INTL-FCStone says China accounts for most of the growth in U.S. exports this year but he says it’s unlikely they can sustain recent increases.

“The pace of exports overall out the U.S. will probably slow and I’m also expecting government purchases to slow down dramatically.”

He says demand has been able to keep up with most dairy production for the first quarter, but mainly because of increases in exports and government purchases which are likely to decline. 

At the same time, cheese production has increased with added processing, but demand is not keeping pace which Donnay expects to weigh on prices in the months ahead.

Donnay shared his thoughts during his weekly outlook forecast.