US to drive growth in global milk supplies

Thursday, 4 June 2020

By Jennie Tanner

Forecasts for this year’s global milk production are mixed across the key producing regions. The knock on impacts of the coronavirus pandemic is expected to add pressure to farm margins and, in some areas, yields may be reduced due to dry weather. Overall, global milk supplies are expected to increase by just under 1% in 2020.

In the US, production is expected to growth by 1.8% in 2020, contributing the most to global supplies. Though it has seen a strong start to production, with deliveries up 3% in the first quarter of the year, yields are expected to slow through the remainder of 2020. In April and May, farmers were strongly encouraged to limit high production growth by coops and processors to reduce excess supplies while foodservice markets were closed. Lower milk prices in the second half of the year is also expected to discourage increased production.

Argentina has also had a strong start to 2020 with production for the first quarter up by over 8%. However, production in the latter part of the year is expected to be affected by declining quality of pasture due to dry weather. Ongoing economic issues and the reduction in demand will reduce profitability and as such, overall growth of just 2% is expected for 2020.

Similar issues affect the EU. Though there was increased production in Q1, dry weather and the impact of falling demand on milk prices have created the expectation that deliveries in the second half of the year will be below 2019 levels. The forecast from the European Commission suggests a 0.4% increase in production for the full year.

In Australia, drought conditions eased at the start of 2020 and production recovered well. In the first three months of 2020, production was up 4.9% year on year. Milk prices have been high enough for farmers to maintain herds and, along with improved pasture conditions, this has pushed up forecasted growth for 2020 to just over 4%.

Jennie Tanner

Analyst - Dairy & Livestock

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