New milk price cycle to start in 2018

03 Oct, 2017 04:00 AM
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Chart 1: IFCN World Milk Price Indicator
All cycles are following patterns, so does the milk price and with it the delay in supply response.
Chart 1: IFCN World Milk Price Indicator

A new world milk price cycle is tipped to start early next year - with a downward trend, according to a leading world dairy market forecasting organisation.

The European-based International Farm Comparison Network Dairy Research Network presented data and outlook at is annual conference last month.

The organisation has identified five world milk cycles since 2006, and expects a new cycle beginning early 2018.

"This new cycle is estimated to start with a downward trend first, unless a strong increase in milk demand occurs," it said.

The 15th IFCN Supporter Conference at Lucerne, Switzerland, saw more than 100 experts from 80 international dairy businesses.

In three days, participants listened and discussed the actual and future global dairy situation but also got into the question, what makes a dairy region successful in the future.

Core messages were that the dairy world will be driven by price cycles with different length and price amplitude.

IFCN data analyst Łukasz Wyrzykowski said: "The key driver for dairy price cycles is the delay of national milk supply reaction on world market price trends.

"Overall it takes 3-12 months from a price signal on the world market to a change in milk supply growth."

The IFCN presentations at the conference showed that solid and constant information is a key resource to navigate in such a diverse dairy world.

One of the participants said: "Accurate and continuous real-time data, especially on production and the milk prices in the main milk countries is essential for our operational day-to-day business."

The debate among the participants on effective key drivers for successful dairy regions was interesting.

After a discussion round, the dairy experts from the companies identified natural, market and political factors as main drivers in the past.

In the future, new technology and social issues – especially the consumer acceptance – are seen to play a bigger and bigger role.

An electronic poll of participants revealed they say milk processors as needing to take the leadership on this important task.

These companies could be the biggest influencer when it comes to making a dairy region successful.

IFCN managing director Torsten Hemme said: "We are living in a complex and fast-changing dairy world.

"The milk price will remain volatile, but is not a fully unknown factor.

"We in IFCN have reviewed its cycles since 1996 and learned from the past.

"All cycles are following patterns, so does the milk price and with it the delay in supply response.

"So be ready for the next cycle with its ups and downs."

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