November 22, 2010

US dairy producers discover growth opportunities

The US dairy market has the ability to compete in the global market and may influence the world dairy industry in the near future, according to a new podcast released by Rabobank.

"The US dairy industry has the capacity and capability to compete and to provide additional product into the global market," said Rabobank's analyst. "From that point of view, US dairy products will influence the world market because of the volume that can be provided, and we will likely see more US processors and exporters become active globally."

According to the podcast, the position of the US dairy has changed in the recent years.

The US dairy sector used to look to the world market place to get rid of surplus inventory. However, the global market is giving better prices and a bigger proportion is being exported today. In order to gain value from the global market, US processors will need to amend their processing and marketing activities to cater to global market needs.

"Rabobank expects that demand growth for dairy products globally will continue to strengthen and likely see consumption expand around 2.5% per annum over the next five years," said the analyst.

This growth will attract more global competitors to the market place and cause the invention of more products.  This means "US dairy participants can expect to see more inter-linkages between the global market and the US dairy market, as milk prices become more interlinked," said the analyst. 

"Global markets will start to have a modest impact on US milk prices.  And therefore more volatility may be evident as global markets tend to be more volatile," the analyst added.

However, "the domestic market in the United States will remain the destination for the lion's share of milk production, because those consumers are closer and the market continues to offer growth opportunities," said the analyst.