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   Dairy Industry Situation
provided by Jim Gruebele & Associates

U.S. EXPORTS WILL CONTINUE TO WEAKEN IN 2009. Most dairy products experienced price declines and prices for all of them are VERY likely to be lower in 2009 than for 2008. The strongest dairy product is going to be cheese followed by butter. But powder and whey prices will be especially weak.

The international situation is changing, particularly in New Zealand. Milk production will be up sharply. Production in Australia will be up but only by a small amount. As a result international prices will be falling and this will hurt domestic prices.

Domestic milk supplies will grow modestly but international prices are likely to be soft due to changes in milk supply and because of lower overall demand due to the weak economy on a global basis.

                      -Jim Gruebele & Associates, Dairy Industry Consultant, (916) 773-1867