Dairy Rally in 2017

Most ag commodities are still under pressure as 2016 wraps up. The one commodity having better luck at the year-end is dairy, with those contracts higher to close out 2016. There’s some optimism surrounding future prices for dairy producers and Rabobank expects that optimism to continue into the new year. Rabobank predicts the current price rally has a lot of room to go higher, thanks to lagging global milk supplies in the months ahead. Production is continuing to grow in the U.S., but Rabobank doesn’t expect that overseas as tightening global production and smaller stocks are predicted to be bullish for dairy prices. Other analysts agree with Rabobank, saying there’s a lot of interest in milk prices right now. USDA is predicting that American dairy exports will more than quadruple over the next ten years. The U.S. would become the world’s third-largest dairy exporter if those conditions can be met. This prediction comes after exports dropped in 2015, thanks in part to obstacles like a Russian ban on U.S. dairy products as well as lower demand from China.