U.S. milk powder producers are adding 440 million pounds of processing capacity over the next 2 years. The most immediate impact of Britain’s vote to leave the European Union surrounds currency rates and their impact on U.S. dairy trade. This and other U.S. dairy industry news can be found here.
CoBank: U.S. milk powder producers adding capacity for the future
With U.S. milk processing capacity stretched to its limit in many parts of the country, producers of milk powder are adding significant capacity with an eye toward the future, according to a new research report from CoBank.
In the face of a global supply buildup and flagging prices, new projects are in the works that could add an estimated 440 million pounds per year of additional powder manufacturing capacity in the U.S. over the next two years.
Plants becoming operational during the 2016-18 period include Hilmar Cheese (Turlock, California) and Darigold (Sunnyside, Washington) in 2016; Lonestar/Hoogwegt (Canyon, Texas) and Valley Milk (Turlock, California) and Dairy Farmers of America (Garden City, Kansas) in 2017; and Select Milk (Littlefield, Texas) in 2018.
While this expansion may appear to be ill-timed in the current market environment, the longer-term outlook paints a much different picture, said Ben Laine, a senior economist with CoBank’s Knowledge Exchange Division. In the long run, emerging markets and a growing world population will enable U.S. dairy producers and processors to expand, especially if our powder industry competitively positions itself.
A video synopsis of the report, “U.S. Milk Powder – How Long Will the Current Global Glut Persist” is available at CoBank’s YouTube page.
‘Brexit’ leaves more questions than answers for U.S. dairy exports
The immediate impact of Britain’s vote to leave the European Union (EU) is likely to be relatively small, with global dairy supply-demand and pricing dynamics playing a much larger role, according to the head of the U.S. Dairy Export Council (USDEC).
The most immediate impact surrounds currency rates, with a decline in the Euro allowing European suppliers to establish lower prices in U.S. dollar terms, said Tom Suber, USDEC president. U.S. and Oceania competitors will need to meet those dollar-denominated prices to be competitive.
This comes as we had begun to see signs of small but significant price improvement in the global dairy markets – not recovery, but improvement, Suber said. This latest development is making sustainable price and market recovery all the more challenging.
The U.K. exit vote almost certainly puts the Transatlantic Trade and Investment Partnership (T-TIP) in a holding pattern.
What comes next? The full implications will take time to become clear. Britain’s vote is only the beginning of what will be a lengthy process of negotiations over its trade, business and political links, Suber said.
Read the full article on the U.S. Dairy Exporter Blog.
CWT assists with export sales
Cooperatives Working Together (CWT) export assistance bids accepted for week ending July 1:
• Butter – 352,740 pounds
Bids were accepted from Dairy Farmers of America and Northwest Dairy Association (Darigold).
Year-to-date accepted bids:
• Cheese – 28.10 million pounds
• Butter – 5.35 million pounds
• Whole milk powder – 20.41 million pounds
Milk equivalent (milkfat basis) – 528.70 million pounds
Source: National Milk Producers Federation
Companies and products
News concerning dairy processors and products:
• Agropur Dairy Cooperative opened a new head office complex in Longueuil, Quebec. The $100-million facility also includes a distribution center and the country's largest dairy research and development center. Agropur is the world's 16th largest dairy processor by milk volume.
• LALA, a Borden Dairy brand, expanded its line of on-the-go yogurt smoothies with the introduction of a hunger-curbing variety (LALA Healthies Curb) and a 100-calorie yogurt smoothie variety (LALA 100 Calorie).
• Organic Valley will deliver its fast-growing Grassmilk Yogurt line in 6-ounce, single-serve cups, beginning in September. Grassmilk yogurt is produced from organic milk from cows that are 100 percent grass-fed, with no supplemental feed, grain or soybeans in their diet. Introduced about 12 months ago in multi-serve tubs, the grass-fed yogurt market is growing five to eight times faster than the overall organic yogurt category, according to the cooperative. PD
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Dave Natzke
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