Farm Ireland

Monday 18 December 2017

International milk surge on back of improved returns

Darragh McCullough

Darragh McCullough

The world's big milk exporters are poised to boost milk supplies during the remainder of this year.

The biggest growth is coming from South America, where Brazil and Argentina's output have increased by more than 7pc and 5pc respectively.

New Zealand milk production is also 5pc higher than last year.

Favourable returns on the milk/feed ratio, combined with good winter pasture conditions, has fuelled the global expansion of the dairy sector, according to Rabobank, the Dutch finance provider.

Recent herd culling has resulted in improved yields in the US, which, combined with increased replacements being introduced to the herd, helped supplies grow by 2pc. Australian output is also up by 4pc in the quarter ending in July.

Looking ahead to the remainder of this year, Rabobank believes that supplies among the key global exporters will increase. Solid dairy margins are expected to underpin growth in the EU, Brazil, US and Argentina. The seasonal New Zealand peak is approaching, with growth of 5-8pc anticipated for the 2010/11 season -- if climate conditions remain favourable. In Australia, better rainfall has helped pastures, with growth in supplies over the next quarter expected to be 3pc.

Rabobank expects some easing in global dairy consumption in response to weak economic growth in developed economies and some price pressure in developing economies, as retail dairy prices increase.

Despite this trend, any slowdown in consumption is expected to be counteracted somewhat by increased import demand from milk-deficit regions such as Russia and Pakistan, where supplies have been interrupted.

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In addition, output in grain-fed regions could ease over the coming months in response to higher feed prices.

Irish Independent