Progressive Dairy - Marketwatch
Jason Ridge, Director of Carbohydrate Sales from Milk Specialties Global and Ronald K. O'Brien II from Nui Markets discuss how to activate digital methods to benefit both buyers and sellers in this month's issue of Progressive Dairy.
Written by Ronald O’Brien II - President, Nui North America
U.S. dairy exports continued the roller coaster ride it’s been on all year, with a 5% decrease in May. In months prior, we've seen an upturn in April, a steep drop in March and a rebound in February. U.S. exports can’t seem to sustain success.
Yet there are a few bright spots. Cheese exports were up a solid 47% year over year, second-highest in history behind March totals. Also, both high and low protein whey exports increased over year-ago levels.
According to the U.S. Dairy Export Council, the challenge over the balance of 2024 will be to sustain consistent product shipments. A stronger global economy and rising consumer confidence will help with demand, as will an improvement in Chinese pork production.
For companies who are buying and selling dairy products on a global market, market fluctuations create stressful moments. It’s difficult to predict where product prices are heading at any given moment, which affects the confidence in any specific pricing position.
Digital tools help make the trading process easier
Digital technology, and even the advent of artificial intelligence (AI), has made life a bit easier for buyers and sellers. Transactions between buyers and sellers in the global dairy market happen every minute of the trading day. That makes it critically important to stay up to date with product availability and price, even though availability and price may be changing at a rapid rate.
Prior to the availability of digital technology, trades were made over the phone, through email or even by fax. Prices could change, new players could emerge, and product availability could diminish, all in the amount of time spent waiting for a call to go through or for some to respond to an email. With digital technology, traders can see data in real time and make bids or adjust offers with little delay.
Milk Specialties Group (MSG), in addition to providing feed ingredients for dairy producers, also produces dairy-based products to meet a variety of consumer needs on a global basis. They use a digital platform powered by Nui to sell what they call opportunity ingredients,” which are commodity dairy ingredients that might not meet the original sales specifications for which they were intended. These products are sold all over the world.
Jason Ridge, the director of carbohydrate sales for MSG, says using a digital platform helps them move these high-volume products more efficiently. MSG can more easily transact and move this inventory without allowing it to build and accrue age.
Al is playing a role
As in all digital platforms that accumulate a significant amount of data, AI is playing a role in shaping how trading decisions are made. The creation of data and acquiring access to it through a digital platform helps users take advantage of generative AI. The more people get involved in digital trades, the more data will be created and the more likely the data will be useful when using AI tools to make trading decisions.
Digital platforms have changed the way companies in all areas of agriculture and the food industry conduct business and perform transactions. What hasn't changed is the volatility in dairy product markets across the globe. But buyers and sellers can now use digital tools - supported by AI - to make more informed decisions in real time that directly impact their business.
At the producer level, the fact that buyers and sellers can trade products more efficiently on a global basis may not seem to affect what happens on the farm. Remember that 15% to 20% of all U.S. production is exported, and the fluctuation of that percentage has a direct impact on the price you receive for your milk. If the use of digital technology makes their job easier, it should have benefits throughout the system.