- Cheese prices crumble — but the global trade dispute could halt their drop:
Roger Orth, an independent market maker, points out that China and Mexico are two of the largest destinations for U.S. dairy products “by a wide margin.” They’ve both implemented tariffs on cheese, in retaliation to U.S. tariffs. U.S. dairy exports to Mexico totaled $1.3 billion in 2017, while China took in $577 million in dairy exports from the U.S., according to the U.S. Dairy Export Council.
“Being involved in a trade war with [two of the] largest importers of U.S. dairy products has the potential to really change the demand side of the equation for our products,” says Orth. “We are seeing the impact now. The question is just how long it lasts.”
In the long run, however, the tariffs may end up being good for the market. “The tariffs are painful now,” but it’s possible they are “setting us up for a ‘perfect storm,’ ” says Tim O’Leary, an independent dairy trader. “With the declining dairy prices, we will have more farms closing up.”
“Should we get back to a ‘true’ balance of trade, I have to wonder what new and increased demands on our dairy market will do to the current prices,” he says.
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