#TGD: Undersupplied Dairy Market Takes Off

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Milk powder prices are up more than 50% since early March, and butterfat and whey prices have posted double-digit increases.


The dairy market situation and psychology has shifted dramatically in just the last six weeks, as the widely reported New Zealand drought sent Oceania prices rallying to record highs, reports the U.S. Dairy Export Council (USDEC).
Writing this week in USDEC’s «Global Dairy Market Outlook» newsletter, staffers Alan Levitt, Marc Beck and Brad Gehrke say milk powder prices are up more than 50% since the beginning of March, and butterfat and whey prices have posted double-digit increases. Rising Oceania prices have pulled U.S. and European prices higher as well.
«We caution that the meteoric rise in the Global Dairy Trade pricing is primarily a reflection of meager offerings on the auction platform,» the trio notes. «Just 13,912 tons and 15,019 tons, respectively, were traded at the two April auctions – a far cry from the average of more than 50,000 tons traded per event from August 2012 to January 2013.»
In the April auctions, just 425-600 tons of New Zealand Skim Milk Powder (SMP) were offered per contract month.
Still, many buyers were caught short by the rapid market turnaround, and now are scrambling to get coverage in a rising market.
«We expect to see undersupplied conditions through the second and third quarters as buyers cope with declining production in Oceania, Europe and Argentina,» USDEC says.
Besides the New Zealand drought, a brutally cold winter and delayed spring has pinched milk production across the European Union (EU), a marked contrast from a year ago, when a mild winter and warm spring gave a lift to milk flows. USDEC estimates milk production in the top five exporting regions (New Zealand, EU-27, U.S., Australia and Argentina) will be down more than 1.0% in the first half of 2013, a shortfall of 1.6 million tons of milk vs. a year ago.
New Zealand has welcomed good rains in the last two weeks, easing the driest summer in 30 years. Pasture growth rates are improving although they’re still below normal for this time of year. «The season has all but ended, so it won’t make much difference for 2012/13,» notes USDEC. «But it should improve conditions for 2013/14.»
In the meantime, product shortages from the end of Oceania’s season should present opportunities for U.S. and European suppliers to fill the gaps. New Zealand suppliers have already warned of the need to ration their dwindling supply in the months ahead.
«Demand remains persistent, but looking ahead we expect to see continued supply rationing as higher prices take hold,» write Levitt, Beck and Gehrke. «In addition, higher farmgate milk prices and improved margins should spur a strong supply response across the globe.»
 
Source: AgWeb

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.

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