Markets to Stay Supported Until Oceania Production Returns

US – Dairy markets are expected to stay supported through the third quarter until more Oceania production comes available in October, the US Dairy Export Council has said.
calendar icon 25 July 2013
clock icon 3 minute read

However, this will come after a September demand surge, expected at the end of the summer holidays.

Meanwhile, the USDEC has stressed the importance of keeping an eye on the world's biggest dairy importer - China.

They say the Chinese market bought 56 per cent more WMP from January to May this year.

USDEC predictions have forecasted advanced widespread buying from New Zealand to maximise opportunities under new advantageous tariff systems.

Other possible developments include pressure on Whole Milk Powder prices. The USDEC has said that a 10 per cent retail cut on infant milk formula in China could tighten the WMP market. 

Global Milk Production

USDEC analysts have said that a return to normal growing conditions across Europe should address historically low stocks - a legacy from diffcult first and second quarter production conditions. 

They added that drought conditions in New Zealand through the first and second quarter caused a 26 per cent drop in milk production.

A 3 per cent fall in milk output of the five main global dairying regions (EU, New Zealand, Australia, Argentina and the US) caused a drop of 2 million tons in milk production over the March-May period.

Consequently, exports from major suppliers were flat over the first five months where previously there had been 8 per cent growth since 2010.

This is despite a huge growth in Indian Skimmed Milk Powder (SMP) buying which rose to 45, 574 tons from very little.

During this time the US stood out as something of an exception by maintaining output as dairy exports rose 26 per cent for May. Whey bolstered exports figures, increasing 9 per cent.

Figures from the National Milk Producers Federation (NMPF) showed a modest May yield increase of 0.8 per cent. This was headed by Kansas and Indiana which leapt 8.1 per cent and 5.2 per cent respectively. 

US analysts have attributed this to lower culling rates which dropped by 20,000 from the previous month. 

However, a seasonal drop in milk production is expected as the summer heat persists. NMPF analysts expect Idaho and California to have water issues soon. 

USDEC export figures have highlighted Middle East/North Africa (+ 29 per cent), South Korea (+ 25 per cent) and Oceania (+22 per cent) as the main demand areas for May.

While the issue of unfair milk prices still rages in Spain, Germany and the UK, progress is being made in England as more processors have begun drafting new contracts. 

Retail giant Tesco is now fully compliant with the dairy code of practice. 

Yeo Valley and Nom dairies have backed the code in relation to third party supplies. 

National Farmers Union Dairy Board Chairman, Mansel Raymond said that there is more improvement to come. 

"According to recent DairyCo analysis of European farm gate milk prices (LTO league table, UK processor prices relative to Average European prices) and also the latest AMPE and MCVE figures, some British milk and dairy buyers are off the pace when it comes to delivering a fair and sustainable milk price to British farmers," said Mr Raymond.


Due to consistent buying from Russia and Japan, the USDEC has stated that Cheese remains the most ‘robust’ of all dairy commodities.

This is shown by the continued growth of Italian cheese exports, now worth €620 million to the economy.

First quarter results of the Italian Association of Milk and Dairy show an increase of 7.6 per cent on 2012. Much of the growth is attributed to the expansion of soft cheese.

Particular growth has been seen in Mozzarella, currently worth around 11 per cent more and experiencing 13.5 per cent greater trade.

Exports have been higher to European buyers (+13.5 per cent) and to the rest of the world (up 12.7 per cent).

However, the Association has stated that the lift in sales has been attained by forcing down prices.

US cheese inventories have been confirmed as being almost 98 million pounds higher in May than in 2012. 

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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