The U.S. dairy market has the potential to compete in the global market and is likely to influence the world dairy landscape in the coming years, according to a new podcast released by Rabobank.
"The U.S. dairy industry has the capacity and capability to compete and to provide additional product into the global market," said Rabobank Food & Agribusiness Research and Advisory Dairy Analyst Hayley Moynihan. "From that point of view, U.S. dairy products will influence the world market because of the volume that can be provided, and we will likely see more U.S. processors and exporters become active globally."
In recent years, according to the podcast, the role of the U.S. dairy has changed. (The full podcast is available online at http://news.rabobankamerica.com/pr/rb/electronic/rabocast_16_moynahan_usdairy_v2.mp3.)
Initially the U.S. dairy sector looked to the global market place to clear surplus inventory, but today the global market is offering more attractive prices and a larger proportion is being exported. However, to extract value from the world market, U.S. processors will need to make some changes in their processing and marketing activities to meet world market requirements.
"Rabobank expects that demand growth for dairy products globally will continue to strengthen and likely see consumption expand around 2.5 per cent per annum over the next five years," said Moynihan.
This growth will lure additional global competitors to the market place and lead to the creation of additional products. This means "U.S. dairy participants can expect to see more inter-linkages between the global market and the U.S. dairy market, as milk prices become more interlinked," said Moynihan.
"Global markets will start to have a modest impact on U.S. milk prices. And therefore more volatility may be evident as global markets tend to be more volatile," said Moynihan.
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 Moynihan.