Three-year peak trend observed in dairy price

World milk powder prices seem to peak every three years, with the next possible peak in 2016-17, a dairy industry economist says.
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Matthew Newman, of DairyNZ, said global powder prices peaked in May 2013, with whole milk powder (WMP) prices reaching US$560/tonne.
However, since April 2014, powder prices declined sharply because of increased production in key exporting areas such as the United States, the European Union and New Zealand.
In addition, demand has fallen off after high prices, and because China has built up a stockpile.
Newman said that, based on statistics since 2007, world milk prices seemed to be peaking every three years between US$4500 and US$5600 a tonne.
He predicted demand for dairy products would rise over the next five years as developing countries in the Middle East, north Africa, Southeast Asia and China continued to shift to Western diets and their incomes rose.
Newman said that since 2007, world markets had shown more volatility than in previous years.
In the latest global dairy trade auction this week, WMP prices rose 1.6 per cent. Overall dairy prices fell, with butter and cheddar cheese taking the largest hits of -4.1 per cent and -9.2 per cent.
ASB economist Nathan Penny said the low cheddar price could be blamed on the Russian import ban.
ASB was continuing with its forecast for 2014-15 of $5.10 a kilogram of milk solids, compared to Fonterra’s $5.30. ASB’s forecast for 2015-16 is $6.50 and its «long run» projection is $7.
Meanwhile, milk production in China declined 6 per cent in 2013, while cow numbers there fell by 10 per cent in the same year. Foot and mouth disease, forage prices, and increased compliance costs were all factors in the decline.
Newman said China’s per capita consumption of dairy products was only a third of the world average, showing that there was potential for significant growth.
 
Source: Stuff

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