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|USDEC: Softer global market conditions prevail|
|News - Latest|
|Wednesday, 09 May 2012 12:34|
Global dairy prices are off 20 to 30 percent from their spring 2011 peaks as swelling milk production worldwide has turned supply deficits into surpluses.
As a result, rising inventories are expected to keep downward pressure on international dairy markets in the second half of 2012, according to presenters at the U.S. Dairy Export Council’s (USDEC) spring Board of Directors and Membership Meeting May 2 in Chicago.
The meeting attracted a record turnout – a reflection of the broad understanding of the need to operate more effectively in international markets.Current soft conditions are “a painful re-affirmation that market cycles will continue, even as demand, over time, outstrips supply,” said USDEC president Tom Suber.
“In fact, it’s this period of temporary retrenchment that many of our work programs are intended to address.”
USDEC marketing, technical and research activities are supported by U.S. dairy producers through their checkoff program.
The imminent launch of eTDE, a system for electronic transmittal of export documentation, will facilitate smoother transactions.
The negotiating text includes provisions to tame the spread of non-tariff trade barriers that currently hinder trade. On the other hand, sharing a free-trade agreement with the artificially distorted dairy industry structure in New Zealand is problematic, Suber said.
"Yet, it’s also gratifying that the U.S. government is paying close attention to our concerns over the unbalanced market advantage the New Zealand government has provided to Fonterra,” he explained.
“Fonterra has tried to trivialize this issue, but its special pricing privileges – which would in fact increase under proposed structural changes in New Zealand – enable Fonterra to cherry-pick the highest value markets.
"Wide-open, unrestricted bilateral trade between New Zealand and the United States is simply inappropriate under that set of rules.”
Spurred by near-perfect weather and strong farmgate prices, milk production from the five major exporters (the European Union, U.S., New Zealand, Australia and Argentina) is up more than 3 percent in the current production season (beginning June 2011), USDEC says.
“More milk is being channeled into storable commodities as a result, and there are some early signs of stock accumulation as the spring flush builds in the EU and United States.”
Last year, when the world’s largest dairy buyers Algeria, China and Russia collectively pulled back in the second half, Southeast Asia, the Middle East, North Africa and others more than made up for their absence.
USDEC’s fall Board of Directors and Membership Meeting will be held October 18-19 in Washington, D.C., where the rolling three-year Business Plan will be approved by the membership. PD