Global milk production expected to tighten over winter

Wednesday, 20 October 2021

By Patty Clayton

Challenging weather and high feed costs are expected to impact milk production through 2021, despite good prices. This has reduced global supply[1] growth forecasts for 2021 from 1.4% to 1.0%, equivalent to 1.1bn litres less milk.

Both the US and the EU-27 have cut their forecasts for 2021 production in their latest outlooks, reducing global estimates by around 1.4bn litres. However, this is partly offset by production growth in Argentina and New Zealand. 

graph of volume growth in milk supplies for 2021

In the US, the lower forecast is due to a predicted drop in both cow numbers and milk yields in the second half of the year. This is expected to slow down the year-on-year production growth seen so far in 2021, as production cost increases strain farmer margins. However, annual production is still expected to see growth of around 1.7%.

A similar picture applies to the EU-27, with challenging weather over the summer and high feed costs impacting yields in some of the key producing regions. Here, there is some expectation that yields will recover through the final quarter of the year, although that is subject to affordability of purchased feed.

Meanwhile, volumes out of New Zealand for 2021 are forecast to be up 1.9% on last year, although this growth has already been delivered. Production growth over the remainder of this year will be difficult given the high volumes produced in 2020. Adding in the challenge of a potential La Nina event, and the resulting dry weather, there is the possibility of even lower volumes coming out of the region.

[1] Includes key exporting regions of EU-27, US, Argentina, Australia, New Zealand and the UK

Image of staff member Patty Clayton

Patty Clayton

Lead Analyst - Dairy

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