A vital topic for the dairy industry will be U.S. prices relative to world prices, according to Robin Schmahl, hedge and market specialist and DTN contributing dairy analyst.
The U.S. has been consistently maintaining higher prices than world prices, which has really affected exports, Schmahl said. Even if U.S. prices fall, it may take a while for the U.S. to be competitive.
"If we start seeing the U.S. being competitive, it's probably going to take six or nine months before that starts being reflected in our export capacity," he said.
The dairy industry will also be looking at how to slow down milk production in light of milk prices that are $6 to $7 per hundredweight lower than last year, Schmahl said. Record milk output, milk prices substantially below last year and projections of even lower prices in 2016, could lead to heavier culling and a pullback on production in the U.S., depending on the duration of low prices.
Internationally, the industry will be waiting to see whether China is going to step up and purchase more dairy products from both the U.S. and other countries to reduce some of the burdensome supplies.
The inventory for dairy products may also be an issue, as there was not much of a decline in cheese products inventory in 2015.
"We're going to start the year at a higher level than we were a year ago, and with the slow down on exports, we could actually back up on butter and cheese inventories at a faster pace than usual because we didn't see the draw down," he said, adding that cheese storage facilities may be hard to come by.