Medium-term milk price prospects look good as global market stabilises
With Europe past its seasonal milk flush, and southern hemisphere production yet to build to its October peak, milk price prospects remain favourable in the medium term.
This follows a first half of the year when the downward trend in dairy markets had only a limited effect on milk prices paid to dairy farmers across the EU, according to this week’s LTO International Milk Price Comparison annual report for 2013.
On June 17, dairy prices ended a four-month downward trend at GlobalDairyTrade (GDT), the online trading platform for international dairy commodities, through which more than 1m tonnes of dairy products have been traded during the past 12 months — a 27% increase in the quantity sold over the last two years, despite sustained high prices. Prices at the twice-monthly GDT auction rose by 0.9% — the first increase after a 26% price decline since February 4. The next auction takes place next Tuesday,
According to dairy markets analysts at Rabobank, Chinese importers have exited the global market as they look to run down accumulated inventories following “frantic” purchasing in the first quarter of 2014, but lower prices are now enticing other buyers back into the market.
Markets in 2014 have remained relatively strong despite an estimated 3% increase in global milk supply, which compares with consumption growth of only 2.5%. In the EU, market observers say that a modest price correction would make exporters competitive in world markets, slowing the trend in substitution of expensive dairy products with cheaper competitors.
