Global dairy prices exceed two-year high

Global dairy prices have risen 11 per cent over the past two weeks to their highest since July 2014 as expectations grow that the recent dairy glut is coming to an end. By LUCY CRAYMER.
Share on twitter
Share on facebook
Share on linkedin
Share on whatsapp
Share on email

After hovering at historically low levels for much of 2016, prices have finally started to rally as farmers have culled herds to save money and bad weather in New Zealand and Australia has reduced the available milk.
The Global Dairy Trade Price Index, a benchmark of global dairy prices, rose 11 per cent from the previous auction on October 18 to $US3,327 a metric ton. The GDT Price Index covers a variety of products and contract periods in the Global Dairy Trade auction, an international trading platform established by New Zealand’s Fonterra Co-Operative Group.
Whole milk powder rose an average of 20 per cent, while butter prices were up 4 per cent.
“Even the most jaded cynic has to be impressed by [the whole milk powder] rise,” said Commonwealth Bank of Australia in a note.
After having nearly tripled from 2009 to 2014, milk prices have slumped since then as farmers increased dairy supplies to try to cash in on an expected surge in demand from China and the Middle East. The situation got worse in August 2014 when Russia banned imports of food from the US, Australia, Canada and Europe, cutting off a market for dairy and increasing the surplus.
But that surplus is now waning as supplies start to tighten.
Fonterra, responsible for around 30 per cent of the world’s dairy exports, has forecast that farmers supplying the company will produce 7 per cent less milk in the year to June 30, 2017 than they did last year, while farming body Diary Australia is expecting Australian production to contract 5 per cent.
In Europe, EU milk collection in the second half of the 2016 is expected to be 2 per cent below 2015, according to data from the European Commission.
Production has fallen as farmers, many of whom have been operating below the cost of production, have been forced to send cows to the slaughterhouse to raise revenue and reduce spending rather than continuing to milk them.
Supplementary feeding, which increases milk yield but isn’t necessary, has also been reduced to cut costs. On top of that, New Zealand’s most productive dairy region has been hit by heavy rains, which has reduced milk supply.
Global production remains key to the outlook as improving prices will likely encourage increased supply and if this happens it could again weigh on prices, said Bank of New Zealand economist Doug Steel.
In addition, “there is still a big stockpile of skim milk powder in. Also, currently low international oil and grain prices, a weak euro, and omnipresent global risks still suggest some caution is warranted around dairy prices ahead,” he said.
Source: TheAustralian
Link: http://www.theaustralian.com.au/business/news/global-dairy-prices-exceed-twoyear-high/news-story/55477a3570edad99ce695e38ad0442c3
 

Mirá También

Así lo expresó Domingo Possetto, secretario de la seccional Rafaela, quien además, afirmó que a los productores «habitualmente los ignoran los gobiernos». Además, reconoció la labor de los empresarios de las firmas locales y aseguró que están «esperanzados» con la negociación entre SanCor y Adecoagro.

Te puede interesar

Notas
Relacionadas