It was a truly wild week on LaSalle Street. The dairy markets swung violently back and forth amid the onagain, off-again trade war. On Monday alone, the March Class III contract lurched more than a dollar from low to high. At its worst, it was 39ȼ in the red, compounding a 70ȼ loss last Friday. At its best, it was up 71ȼ for the day. Milk prices remained mercurial throughout the week even as the trade spat cooled from tense to tepid.
The U.S., Mexico, and Canada agreed to a 30-day détente in exchange for efforts to slow the flow of drugs across our shared borders. There was no such pause for China. The U.S. upped its tariff on Chinese imports by 10% across the board, and China responded with a precision strike. It imposed tariffs on a limited number of U.S. energy products and vehicle imports, and it made some politically targeted sanctions. Crucially, China did not include soybeans or whey in the list of U.S. products subject to a higher border tax, but it could up the ante and hit those products at any point.
While the reprieve from a trade war with two of our three largest dairy export markets is a relief, the drama is not without consequence. Since the election, some U.S. milk powder exporters have been reluctant to overcommit. USDA’s Dairy Market News described Mexican demand for U.S. milk powder as “subdued” and noted the chilling effect even on domestic buyers who “are taking a cautious approach in order to avoid catching the proverbial falling knife.” U.S. milk powder exports were indeed subdued in December. They fell 23% year over year to the lowest December tally since 2016.
By Dairy Business News Team DP
February 10, 2025
Comments