Global milk supply growth slowing
Global milk supply growth slowing despite bumper start to NZ season – Rabobank
While combined milk supply growth across the world’s ‘Big 7’ dairy exporters slowed during quarter three, a bumper start to the New Zealand milk production season has seen soft demand for Oceania-origin dairy products in recent months, according to Rabobank’s latest Dairy Quarterly report, with the bank now forecasting a lower New Zealand milk price of NZD6.65/kgMS for 2018/19.
The specialist agribusiness bank says the slowdown in combined milk production growth seen in quarter two 2018 from the ‘Big 7’ (the EU, the US, New Zealand, Australia, Uruguay, Argentina and Brazil), at just one per cent year-on-year (YOY), has trickled through to quarter three, driven by a number of factors including drought conditions in parts of northern and western Europe.
The report says decreased milk production from drought impacted areas is at odds with the start to the New Zealand dairy season where near-perfect weather and more cows milked over the winter period resulted in production growth of five per cent YOY over the seasonal trough period from June to August.
Report author, Rabobank dairy analyst Emma Higgins says the jump in New Zealand milk supply has created a lack of buyer urgency for Oceania-origin products over the past quarter and this continued in the most recent GDT Event.
“This lack of buyer urgency has resulted in weaker pricing which fed into the bank’s downward revision to its full-year forecast from NZD 6.80/kgMS to NZD 6.65/kgMS for the 2018/19 season,” she said.