Milk in key exporting regions
%-change versus previous year
Europe
Liquid market dynamics resemble peak production circumstances
Supply side pressure in the market for dairy liquids is high. Not only because of the strong milk production numbers but also because of several maintenance jobs that are going on this time of the season. As a result spot milk prices are dropping everywhere but in some markets even more than others. In France spot milk is traded at EUR 0.27, in the Netherlands at EUR 0.32 and in Germany prices are around EUR 0.36. Cream is much cheaper than butter, which is unusual at this time in the season. Cream prices already dropped to a level where consumers actually are starting to benefit, as some German retailers have cut their butter prices by 25%, which triggered strong consumer purchases. Bulk formats however have more difficulty finding a home.
Americas
Break even levels have moved lower for most US milk producers
Milk production is expected to remain 3% or more above last year’s levels. Milk production is boosted from both sides: herd numbers and cow productivity. Break even levels are reportedly quite low for most farmers as feed prices are favorably low and returns from the beef market are favorably high. Farmers have therefore very little incentive to remove cows, even though market returns point towards lower milk prices in months to come.
Asia-Pacific
Relatively modest surplus pressure in Oceania
Of all the major export regions Oceania experiences the least amount of surplus pressure. New Zealand produces a healthy plus compared to last year’s already favorable start, but Australia takes the aggregated volume down a notch due to its 3% decline compared to last year. Because of this and also because Asian buyers are stepping in after the recent price declines, the market balance just before the seasonal peak is less supply-heavy than in the EU and the US.
More insights
If you're interested in Milk, you may also like these topics:
