October 25, 2017

 

'More milk being produced'

 
Global dairy prices have exhibited relative stability in the third quarter asglobal markets remained well balanced, according to the latest global dairy report of the agricultural lender Rabobank.

 

It said higher farmgate milk prices have been the major catalyst for a supply-side response, and that the export engine is again producing more milk.

 

"Global dairy markets remained buoyant into Q3 2017, be it with an ongoing theme of a record price spread between dairy fat and protein", said Michael Harvey, RaboResearch senior analyst - dairy. "The outlook for commodity markets is for a balanced market to continue".

 

Harvey added that milk production across the export regions was revving up and that the pace would accelerate in the coming months, largely led by the imminent Oceania spring flush.

 

However, sustained buying from China is expected to prevent the market from being overwhelmed this fourth quarter.

 

Key markets

 

Despite ongoing issues in some key regions, the milk production growth rate in the EU is at its healthiest since 2016, with milk prices still improving, according to the RaboResearch Dairy Quarterly report. 

 

The report noted that the US dairy industry has now had a run of more than 40 months of consecutive milk supply growth and that this is set to continue, albeit with regional variance.

 

In New Zealand, Rabobank expects strong milk production for the 2017-2018 season, provided conditions improve, since very wet weather across most parts of the country has set challenging conditions for the start of the season.

 

With weaker production, China's imports have picked up strongly, and this trend is expected to continue into 2018, although at a lower rate, the report said.

 

It said the scenario for dairy consumption in South America was less optimistic, given economic headwinds.

 

Following seven quarters of consecutive declines, Rabobank hopes Australian milk production will have returned to growth in the third quarter. The 2017-2018 season is forecast to deliver 2.5% growth, supported by improving farm profitability and favourable seasonal conditions.