U.S. milk futures are nearing a nine-month high, with prices approaching 17 cents per pound.
For U.S. dairy farmers, low-cost corn and soybeans, along with high-value milk, present a golden opportunity, but trouble may be lurking around the corner.
Global dairy prices have fallen to an eight-month low, which could ultimately drain U.S. prices lower as low-cost dairy from foreign markets undercut U.S. products.
The world’s largest dairy exporter is the island nation of New Zealand, which accounts for almost 20% of global sales. New Zealand has expanded its production in recent years, especially to meet rising demand from China, where consumer demands have shifted toward consuming more dairy in recent years.
U.S. dairy farmers would love to win more Chinese and other foreign business, as one fifth of all U.S. farm income is derived from foreign trade, a figure that has been rising in recent years.