Another factor is the Canadians tariffs.
Dairy farmers eager for Trump to ease milk glut
Dairy farmers want Trump to take aim at Canada's policies.
Blame Canada. That’s what U.S. farmers say about some of the bubbling gluts weighing on the milk market, and they are eager for President Donald Trump to do something about it.
...Under the 1994 North American Free Trade Agreement, which Trump has lambasted as “the worst trade deal ever,” most U.S. dairy products face duties of as much as 300%. Ultrafiltered milk wasn’t part of those rules and arrives in Canada without tariffs.
...A key battleground is the little known market for ultrafiltered milk, a concentrated ingredient used to boost protein content in cheese and yogurt. Canada is creating incentives for processors to buy from domestic manufacturers. U.S. producers say that could be a disaster, and they allege the new policy would violate trade agreements. Companies in Wisconsin and New York alone might lose $150 million in sales north of the border.
...Meanwhile, American companies say they have already lost Canadian customers. Grassland Dairy Products Inc., based in Greenwood, Wisconsin, annually exports $100 million of ultrafiltered milk to Canada. The company probably will lose all those sales in the next few months, said Goedhart Westers, vice president of business development. It could take two or three years to find sales with similar returns to replace the lost exports, he said.
“Us losing this business, it means we might have to scale down,” Westers said. “It’ll affect employees, and the thousands of farms we buy milk from in the Midwest.”
http://www.farmfutures.com/dairy/dairy- ... -milk-glut
The new Canadian policies also cap the amount of skim milk powder they will buy, resulting in more (an estimated 120,000 metric tons/year) being sold into a 2 million-ton global market, causing a significant disruption in prices, said James McVitty, vice president of government relations and trade strategy for New Zealand-based Fonterra Co-operative Group Ltd., the world’s biggest dairy exporter.
“We share the concern of the U.S. industry,” McVitty said by phone from Washington.
Maybe Trump has a reason for what he's doing with Canada. And Canadian Prime Minister Justin Trudeau knows he will have to deal with this in NAFTA negotiations if not before.