What are some factors that affect current dairy prices?


Quick Answer

Some factors that affect current U.S dairy prices as of 2015 include a drought in New Zealand, a Russian ban on dairy imports, projected exports and domestic demand. Some of these factors are less predictable in their effects than others.

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Full Answer

The drought in New Zealand has hit many of the major milk-producing areas, affecting global and U.S. domestic dairy prices. If it continues, the drought may force farmers to dry-off cows and end the season early. However, drought-ending precipitation could also return production to normal levels, mitigating any long-term effects. The global dairy industry has shuffled to adjust to certain Russian import bans on most items except for cheese, which is mainly produced in banned areas. This led to Russian cheese imports dropping by 42 percent in 2014.

Because most American dairy export orders are scheduled up to six months advance, and there has been a slowdown in exports from ports in the West, making up the difference from other areas may have a marked effect on domestic prices. Domestic demand also looks strong for 2015, and lower gasoline prices and higher employment levels create increasing cheese and butter demands from restaurants, causing consumption to rise. But because of butter import restrictions, U.S. butter prices are not affected by lower global prices.

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