IFCN Conference 2016: Is the tide about to turn for global milk prices?

Published 15 June 16

Global milk production growth looks set to slow down in 2016, with world demand for dairy products expected to overtake milk supply as a result. This is based on estimates from the IFCN’s researchers around the globe and was one of the key topics discussed at its dairy conference in Belgium last week.

However, IFCN warned that a rebalancing of supply and demand will not necessarily lead to a sustained and full price recovery in 2016 – this will depend on how the world’s significant build-up of dairy stocks is managed.

Dairy stocks have reached massive levels during the downturn, with powder volumes particularly high. In the EU, over 320k tonnes of SMP have been offered into intervention over the last twelve months and another 32k tonnes is tied up in private storage aid (latest data to end of April). This is already significantly more SMP than China imported during the whole of 2014, its peak import year, and stocks in other regions are also high.

Clearly, if stocks start flooding onto the market too quickly or too early, recovery is likely to be hampered. However, IFCN suggests that if stocks are managed carefully, then a substantial recovery could theoretically begin later in 2016.