May 9, 2012

World dairy product prices began to drop in mid-2011, as supplies to the international market improved.

The price slide reflected a rise in export availability but also a fall in the value of the euro against the USD. Yet, in spite of the recent drop, international prices for dairy products remain well above historical averages.

With publically financed inventories at minimal levels in the EU and the US, the market is particularly sensitive to sudden changes in milk production and the availability of milk products. Nonetheless, the positive supply outlook for the rest of 2012 is likely to translate into further downward pressure on prices.

World milk production in 2012 is forecast to grow by 2.7% to 750 million tonnes. Asia is expected to account for most of the increase, but higher output is anticipated in most regions.