Summer weather shrinks growth in global milk pool

Published 17 October 18

Prior to the hot, dry weather affecting milk production in some key dairy regions, the global milk pool was forecast to grow by 1.4% in 2018, providing an additional 4 billion litres of milk to the market. However, the likely impact on yields from heat stress, higher feed costs and reduced dairy herds in both the EU-28 and Australia is expected to shave around 730m litres (19%) off the earlier predicted growth in volumes.

change in global milk pool 2018 

In its latest short term outlook, the EU has lowered its production forecast for 2018 to 0.8% growth, down from the 1.2% forecasted earlier this year. This translates to roughly 600m litres less milk than what was initially expected, and suggests that milk deliveries for the remainder of the year are likely to fall below last year’s levels.

In Australia, the lack of forage, and associated high feed costs, has already resulted in a spike in culling activity. This has led Rabobank to revise its production forecast for the 2018/19 season (July-June) to an overall decline of 2%.

The reverse situation has affected forecasted production in New Zealand, where good weather and growing conditions have provided for a strong start to the new season. Milk production in August was up 4.7% on last year, leading Fonterra to increase expected production for the season by 1.3%.

While Fonterra has also reduced its forecasted farmgate price, lower prices are not expected to impact on production through the peak period (Sep-Dec), which accounts for 53% of NZ’s annual output.