December 31, 2013

Southeast Asian milk production has come under threat as producers struggle with outbreaks of foot-and-mouth (FMD) disease, dairy analysts said.

A 20% drop in China's milk production is reported to have taken place in part due to FMD. This, combined with high feed prices and high beef prices, is believed to have led to the slaughtering of around two million cows. In India, despite official claims that the disease is under control, it is thought that some regions are experiencing reduced milk production. Similarly, Korea is still recovering from an outbreak of FMD in 2008, after it was forced to slaughter 8% of its dairy herd.

The decline in domestic production for these countries is thought to be helping to support the stability in world dairy wholesale prices, which have remained elevated despite increased milk supplies from the key global producers.

Meanwhile farmgate milk prices across Europe continue to strengthen on the back of Asia's animal health problems.

The October EU27 weighted average milk price stood at €39.52 (US$54.45) per 100 kilogrammes, up €1.08 (US$1.49) per 100 kilogrammes (2.8%) on the previous month. Compared with the previous year, the weighted average EU27 price for October was up €6.35 (US$8.75) per 100 kilogrammes (19.2%).

The October EU28 weighted average price, including Croatia, which joined the EU on July 1, 2013, stood at €39.52 (US$54.44) per 100 kilogrammes, up €1.08 (US$1.49) per 100 kilogrammes (2.8%) on the previous month. Significantly, the average UK farmgate price in October stood at €38.41 (US$53) per 100 kilogrammes, which was the 12th highest price of any nation in the EU15 after Finland, Ireland, Greece, Sweden, Netherlands, Germany, Italy, Denmark, Belgium, Austria and Luxembourg.

The EU15 weighted average price stood at €40.28 (US$55.5) per 100 kilogrammes in October, €1.01 (US$1.39) per 100 kilogrammes (2.6%) up on September and €6.48 (US$9) per 100 kilogrammes higher than the October 2012 average. Looking at the top-five milk producing countries (Germany, France, UK, Netherlands and Poland), the average October price was €38.63 (US$53) per 100 kilogrammes which was a €0.79 (US$1.10) per 100 kilogrammes (2.1%) increase compared with the previous month.