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Global milk supplies to lift slightly, some risk to prices
Tuesday, 15 June 2021
By Bronwyn Magee
Growth in global milk supplies in major exporting regions has been limited so far in 2021 according to Rabobank’s latest Global Quarterly Report. Globally, milk production is expected to rise 1% year-on-year over the next 12 months, driven by higher deliveries in the US and a strong finish to the New Zealand season. However, milk production in the EU has been lower than anticipated, a result of unfavourable weather conditions seen throughout the spring and the impact on margins of rising feed costs. Rabobank’s forecast that EU milk supplies will lift by just 0.5% in 2021.
Looking ahead, Rabobank expects feed prices to remain elevated into 2022, a result of adverse weather conditions delaying plantings in some regions. This could add further pressure to farm margins and curtail growth in the second half of the year.
Dairy product prices on global markets remain above those seen last year, although price rises for some products have slowed in Q2. Strong Chinese import demand through the first half of 2021 has been supporting these elevated prices. However, Rabobank anticipates demand will soften in the second half of the year, likely influenced by growing Chinese domestic production. As such, reduced import demand could see some downward price adjustments in global dairy markets over the coming months.
Meanwhile, retail and foodservice demand is reported to be nearing pre-pandemic levels in some large dairy markets such as the US and China. However, vaccine roll-outs are slow in other regions and the threat of new waves and variants persists, which may pose a risk to dairy markets going forward.
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