Farm Ireland

Friday 19 April 2019

Global milk output stagnant

Milk production in New Zealand grew by 7.7pc through the back end of 2018
Milk production in New Zealand grew by 7.7pc through the back end of 2018
Declan O'Brien

Declan O'Brien

Global milk output is unlikely to grow by more than 0.5pc during the first quarter of 2019, according to Ornua's latest market report.

In what amounts to good news for dairy farmers, the report points out that sluggish production figures for the US and EU have offset bullish growth in Kiwi supplies during the early part of the year.

Milk production in New Zealand grew by 7.7pc through the back end of 2018, while supplies in the US were expected to be up by a more modest 0.5pc. In contrast, however, EU milk output fell by around 0.8pc.

"EU and NZ flows over the next few months will be key drivers of market direction," the Ornua report predicts.

"Global exports finished 2018 on a positive note, lead by exceptionally strong powder buying from China and to a lesser extent Southeast Asia. This pattern continued into Q1 and the GDT has increased for seven consecutive auctions," it added.

However, Ornua noted that demand has been more sluggish elsewhere, with trade wars and weaker economic growth hitting sales.

"The butter market has weakened. While production has slowed, it has been growing at a faster rate compared to demand and stocks are back to normal levels," it states.

Dutch spot market prices for butter have eased back from €4,400/t in January to €4,070/t last week.

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Buying remains quiet for cheese although market pricing is stable.

The SMP market stabilised after firming post-Christmas. This has been seen in Dutch spot market prices for SMP which increased from €1,500/t since last October, but have now flat-lined at €1,970/t.

The Ornua report pointed out that strong Chinese imports have boosted the WMP market, although demand in other regions, such as the Middle East and North Africa, has been poor.

Meanwhile, the ICMSA insisted cuts from both Kerry and Glanbia in the overall price farmers were getting for February milk ran counter to market developments.

ICMSA dairy chair Gerald Quain said there has been a slight softening of butter price but that has been more than compensated for by powders.

He said farmers were very angry at the decision. "Their suppliers expect - and have a right to expect - them to lead from the front on milk price and they are extremely disappointed by the unexpected and unjustified reduction in milk price for February."

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