Dairy supply crunch challenging global market

Dairy supply crunch challenging global market.
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Milk supply from dairy export regions has fallen sharply, by 2.6 million metric tons in 2H 2016, with milk volumes from Oceania and Europe severely challenged, according to the Rabobank “Global Dairy Quarterly Q4 2016.”
The report showed domestic demand in the U.S. and Europe continued to strengthen, negating the need for further stock growth and reducing volumes available for export by 4.5 million metric tons in LME terms. As a result, global dairy prices have rocketed upwards, increasing by over 45% in 2H 2016.
Most of the domestic demand growth is for cheese and butter, Rabobank said. Therefore, the spread in prices across the dairy complex stocks will remain wide, with demand for butterfat driving the market and surplus protein, including European stocks, weighing on the market.
“Milk production around the world in 2H 2016 is in poor shape. Europe’s production has tightened—not only due to low prices, but also in response to the efforts of the European subsidies, which—if farmers deliver on their commitments—should remove a million metric tons of milk from the market,” said Kevin Bellamy, Rabobank global dairy strategist. “Meanwhile, we’ve seen poor production in Oceania, with New Zealand missing last year’s peak production levels by 6%.”
Other key highlights from the report included:
The current price rally has further upside to come, as milk supply growth across the export regions will take time, despite improving milk prices.
Prices across the dairy product matrix will diverge, driven by higher butterfat demand and surplus of protein stocks.
Significant recovery of production and volumes available for export will be delayed until 2H 2017, as the new Oceania season commences.
China will return to the international market, and we forecast imports to rise by 20%.However, further strengthening of the US dollar, combined with rising commodity prices, will challenge demand from other key importing regions.
The “Dairy Market Report,” published monthly by National Milk Producers Federation and the Dairy Management Inc. reported U.S. dairy exports continue to improve, with export volumes up during August–October compared to a year earlier for most major product categories.
“Nonfat dry milk and dry whey prices have been rising due to an improving world market for dairy ingredients. This has helped lift U.S. producer milk prices, starting from when they bottomed out in May,” the report noted.
However, the report also noted that the average all-milk price dropped by 70 cents a hundredweight from September to October, mostly due to a drop in Class III and Class IV prices as domestic butter and cheese prices became somewhat volatile heading into the holiday season.
Source: Feedstuffs
Link:  http://www.feedstuffs.com/markets/dairy-supply-crunch-challenging-global-market

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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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