A weaker US dollar may not be what the Federal Reserve wants but it favours the country’s dairy farmers as it makes US dairy products more attractive on the world market as milk supply continues to increase.

The US dollar weakened last week with the US Dollar Index, the marker used to track the dollar against six other currencies, hitting a six-month low of 96.797.

Mike North, president of Commodity Risk Management Group, said that dairy markets are not seeing any end in sight for increasing supply.

“The reality for us is that we haven’t gone low enough to take profitability down far enough to disincentivise the dairymen from keeping cows and adding to the herd,” he said in an interview with US TV show Ag Day.

Growth

Ample feed supply and good management on US dairy farmers were other factors highlighted by North which would allow cow numbers to continue to grow.

While exports have increased, it hasn’t been enough to offset the increase in supply, but North thinks that with the changing value of the US dollar some more doors could open.

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The US dairy industry is hoping that a weakened US dollar will boost exports in a time of growing domestic supply, writes John Boylan.