Production to remain high in key export regions

Published 16 June 15

As stated in a previous article, wholesale price recovery is not expected until 2016. A key factor for this is the forecasted continuation of strong milk production from important export regions.

USDA milk production forecasts for 2015 and 2016 have been revised upwards, resulting in an expected increase of 1.3% on 2014 and 2.5% on 2015. The forecast, presented in the latest World Agricultural Supply and Demand Estimates (WASDE) report, were attributed to an expected gain in output per cow as input costs are predicted to fall further.

In New Zealand the Ministry for Primary Industries (MPI) predict milk production to ease back in the 15/16 season (June-May) by 1-2%, however production will still be at high levels. The decrease is expected to come from lower milk solids per cow, while cow numbers continue to increase. This reduction in solids is forecasted on the basis of a reduction in supplementary feeding. However, the MPI expect New Zealand’s production to recover after the 15/16 season albeit at a slower pace of 2-3% per annum.

Also as mentioned in last weeks’ Dairy Market Weekly, DG Agri predict EU milk production from the top 10 producing nations will grow by 1.5bn litres per annum (1.2%) over the next 2 years. These high levels of predicted milk production contribute significantly to pressure remaining on wholesale and farmgate prices.