3 Apr 2014

US dairy farmers cushioned

6:25 am on 3 April 2014

American dairy farmers are having a price windfall as global dairy prices fall because its huge domestic market cushions the effect of what is happening elsewhere, a dairy analyst says.

United States milk producers are earning 28 percent more this season than last.

That comes as the Fonterra auction registered its fourth consecutive loss on Tuesday -- although overall prices are still robust.

Susan Kilsby, of NZX-Agrifax, said the difference was that because the US domestic market was so huge, it took longer for the effects of what was happening in the rest of the world to filter through.

"At present they're exporting approximately 15 percent of the milk they produce, so the impact of the global market is much less than in say New Zealand, where virtually all the milk we produce is going into those global markets," she said.

That made US farm gate prices much more stable than those in New Zealand, without the peaks and troughs experienced here.

Ms Kilsby anticipated prices would fall in the US in the next 12 months.