December 6, 2010

 

Global milk output for 2010 seen at 710 million tonnes

 

 

World milk production is expected to reach 710.3 million tonnes this year, an increase of 1.6% compared with the same period last year, according to UN's latest figures.

 

The UN report says while the projected total represented a recovery from the low performance of last year, milk production remained below the average annual growth rate of 2.1% during the past decade.

 

"Additional output from China and India, the major contributors to the expansion of production, amount to 8.4 million tonnes, and account for 58% of the world increase. Brazil, the EU and the US also play their parts by adding another 2.6 million tonnes," the report said.

 

According to the UN, Asia - with an output of 257 million tonnes - remains the world's biggest milk producer and boasts the highest rate of annual growth.

 

Lower production in Pakistan, where floods are expected to wipe off 8% of output, has led to a reduction in the initial 4% production growth forecast, to 2.6%.

 

Due to improved cow yields and lower slaughter rates, US production is forecast to increase 1.1% this year to 87 million tonnes.

 

EU production is forecast to increase just 1% to 133 million tonnes.

 

On the price front, the UN's international dairy products price index has remained firm throughout this year.

 

While the UN said this was in contrast to the "swings" of the past two years, the index remains 20% below its early 2008 peak.

 

"Factors contributing to the sustained firm prices include strong demand from Asia, the Russian Federation and some oil-exporting countries and, more recently, a steady weakening of the US dollar against major currencies which increases dollar-denominated commodity prices. On the supply side, relatively weak growth in milk production from reduced cattle herds, particularly in some exporting regions, has under-pinned firm prices," the report says.

 

It's expected higher feed prices would limit milk production expansion in the US next year, according to the USDA's Livestock, Dairy and Poultry Outlook released last month.

 

"The upward movement in feed prices will pressure producer margins and will likely curtail the modest recovery in cow numbers that began early this year," the report says.