Global milk price recovery tipped

07 Mar, 2019 02:34 PM
Comments
0
 
Dairy growth in parts of Europe, like many other regions in the world, is constrained by the lack of land.
Rabobank modelling suggested European production would increase by just 0.7pc this year.
Dairy growth in parts of Europe, like many other regions in the world, is constrained by the lack of land.

Global milk price recovery is likely on the back of tightening supply and growth in demand, according to Rabobank's global dairy strategist Mary Ledman.

Ms Ledman, who spoke at the Australian Dairy Conference in Canberra in February, said Rabobank’s longer-term outlook revealed an emerging 4-million tonne gap between demand and supply growth.

These fundamentals boded well for the global market outlook.

“The milk prices of 2015 to 2018 (are) likely to become the ‘new norm’,” she said.

Demand growth would be largely driven by Greater China, South East Asia and Africa.

Ms Ledman said three key regions mattered for export supply growth: Europe, the United States and Oceania.

“We see New Zealand continuing to have an export surplus, but smaller than the one that they had five years ago,” she said.

Although US production usually increased every year, there were signs the dairy herd was trending lower there.

“Milk production growth is expected to be less than one per cent in the first half of this year, before returning to a growth rate of around 1.5 per cent,” she said.

“But this rate of growth will remain dependent on the recovery in milk prices.”

Europe was the key region, as it now accounted for 30 per cent of global production.

“As such, what happens in Europe, and the magnitude of any change in European production has a big impact on global trade,” she said

Ms Ledman said Rabobank modelling suggested European production would increase by just 0.7pc this year.

Parts of Europe, like many other regions in the world, were constrained by the lack of land for growth - both of the quality to produce the grass or the forage the cows needed or the requirement to spread nutrient on that land.

“The social licence for dairy farmers to produce in the future is really going to be tied to that land base,” Ms Ledman said.

This meant growth in places such as the Netherlands was constrained.

But there are pockets in Europe with the land to grow milk production, including Ireland, which had really embraced growing its dairy industry after the removal of quotas in Europe in 2015.

Although the news was positive for prices, they were not likely to reach the record levels of 2013-14, Ms Ledman said.

“You almost have to have the perfect storm to have prices like that,” she said.

But the skim milk powder stockpile the EU had accumulated after the removal of quotas was now almost depleted so was not weighing down on prices as it had in 2017-18.

“Realistically prices are going to reflect still some premiums perhaps over the 2015-18 price level but we do not see them hitting the price levels that we saw in 2013-14,” she said.

US growth was being constrained by lower prices for some categories of milk.

Prices had started to recover in the middle of last year, but the negative trade rhetoric had meant lower prices for export cheese and whey.

This meant farmers were paid the lowest average class 3 milk price since 2010.

Page:
1

POST A COMMENT


Screen name *
Email address *
Remember me?
Comment *
 
GIVING South Australia's primary producers access to genetically-modified pasture varieties would be a game-changer for the dairy industry, dairyfarmer Rick Gladigau says. 
05 Mar 19 GIVING South Australia's primary producers access to genetically-modified pasture varieties would be a game-changer...
A TOUGH 2018-19 season and improved irrigation technology has inspired a new crop along the river flats at Murray Bridge, South Australia.
30 Jan 19 A TOUGH 2018-19 season and improved irrigation technology has inspired a new crop along the river flats at Murray...
light grey arrow
The $1 a litre milk has already forced closure of numerous dairy farms. Lion Dairy & Drinks
light grey arrow
ABOUT TIME SOMEONE REALISED THE MILK INDUSTRY IS NEAR EXTINCT. tO PRODUCE MILK COSTS MONEY MUCH
light grey arrow
Hello Frank, I suspect that the air entry problems I have experienced in silage bales over the
MASTITIS management is highly effective but far from conventional for Tasmanian dairy farm manager Richard Hori. That's no surprise given the herd is milked through a robotic dairy.
23 Jan 19 MASTITIS management is highly effective but far from conventional for Tasmanian dairy farm manager Richard Hori....
Spending $2.7million to build a new dairy is part of a rolling upgrade and improvement plan for VAN Dairy Group, located at Cape Grim, Tasmania.29 Dec 18 Spending $2.7million to build a new dairy is part of a rolling upgrade and improvement plan for VAN Dairy Group,...
Australian farm chemical manufacturer Nufarm has repaired its balance sheet and is now hunting for acquisition opportunities.25 Sep 16 Australian farm chemical manufacturer Nufarm has repaired its balance sheet and is now hunting for acquisition...
Monopoly market may confront cropping sector under mega-merger proposal.22 Sep 16 Monopoly market may confront cropping sector under mega-merger proposal.