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FAO Explains April Dairy Volatility

10 May 2013

GLOBAL - Low stocks and abnormal production conditions have led to supply fears and a surge in milk prices over April, lifting the dairy price index almost 15 per cent.

This volatility was largely due to drought conditions in New Zealand, which forced farmers to dry off herds and in extreme cases resort to early culling, the Food and Agriculture Organisation said earlier this week.

In their monthly food price index the FAO said market volatility was also caused by a lack of commercial stocks during supply concerns.

Turmoil in New Zealand involved a production drop of almost a third following a record season. DairyCo has confirmed output drops of 12 per cent in Ireland and 0.5 per cent over Europe this year.

But, despite higher values for some commodities, Australia has learned this week that they are no better off after exporting more dairy products over the past months.

Shipments of Australian dairy exports rose by 7.6 per cent from June to March but the value of dairy exports to the economy fell by 1.3 per cent, says Dairy Australia.

Cheese exports performed poorly, falling by 3.2 per cent in tonnage and 4.4 per cent in value.

Butter oil and whole milk powder both fell, by 26 and 18 per cent respectively, leading to the value drop. Conversely, butter shipments increased by 7 per cent in value grossing A$105,338 after increasing in tonnage by half.

Despite mixed messages and the weather warming up across Europe and the US, the outlook for milk production is bullish with the demand side of the market expanding globally.

Further good news comes in the on-going ‘fair price for milk’ saga in the UK, where positive steps have been taken by Meadow Foods, the UK’s largest independent dairy, and Joseph Heler, a Cheshire based cheese producer.

Both companies have announced price increases of a penny per litre from from 1 June.

While the dairy industry adjusts to market increases and tight supplies, constant efforts are being made to develop milk production in South America.

A shipment of high quality heifers docked in the Port of Puerto Cabello, Venezuela as part of the national policy AgroVenezuela.

In a bid to meet rising demand and feed expanding populations, 781 carefully selected, ’dual purpose’ heifers were shipped from Nicaragua. The tally now stands at 5,000 cattle bringing the government closer to their target of 6,000.

Michael Priestley

Michael Priestley
News Team - Editor

Mainly production and market stories on ruminants sector. Works closely with sustainability consultants at FAI Farms


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