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Apr 12, 2013

Dairy Market Goes Global

AgWeb blogger Dave Kurzawski at INTL FC Stone based in Chicago analyzes how the dairy market has gone global.  As a commodities broker, he has his eye on statistics from the Chicago Mercantile exchange and the other exchanges around the world.  From his view, in spring 2013, a rally that started in the powder milk sector now encompasses the entire market.  This explains why the price of milk has risen between 5% and 10% in March 2013.

How does this work? The first factor is the weak U.S. dollar.  Then there are global weather-related production costs to consider.  Lastly, global food preferences are increasingly demanding high-quality dairy products.  As a result, the U.S. dairy export market now accounts for 13% of total U.S. production.  Exports have doubled since 2007.

The current rally is attributable to dry weather that curtailed dairy production in New Zealand.  As this source dried up, China and other buyers around the world began to look to the United States to make up the difference.  Commodity markets began to adjust, leading to drive for higher prices that the market is now experiencing.

Photo: dairy cows, Fronterra Dairy Co-Op, New Zealand.  Courtesy of Fronterra Dairy.  

About Margaret

CEO and Curator (The Food Museum) | Managing Director and Chief Editor (GR2 Global LLC) | Educator (UCLA PhD) | Researching and writing on global food issues, nutrition and health, sustainability, history (preservation), conservation (natural resources), and design.
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