Dairy

Milk production slowing down

By Country News

Milk production growth has stalled in Europe and pulled back in Australia, according to the latest Dairy Quarterly report by Rabobank.

The 2018 trend of slowing global milk production had continued to creep into the final months of the year, the report said.

Rabobank found Australian milk production had contracted by four per cent in the season-to-date (to October) and this rate of decline would accelerate further into the first quarter of 2019.

A period of sustained higher feed and fodder costs, along with no major improvement in farm gate milk prices, has put farmer margins under severe pressure.

For irrigation farmers in the Murray Dairy district, water trading prices remain near record levels.

Rabobank has trimmed its expectations for milk production for Australia.

National production for the 2018-19 season will fall by as much as four per cent, taking the milk pool back below nine billion litres for the first time since 1996-97.

The combined production from the ‘big seven’ dairy exporters (the United States, the European Union, New Zealand, Australia, Brazil, Argentina and Uruguay) will likely grow by just 0.6 per cent year-on-year in the last quarter of 2018.

However, other regions (such as South America) are bucking this trend, recording positive production growth in the third quarter, while New Zealand remains the star performer, setting a new record for peak milk flows in the month of October.

Ultimately, milk supply across the ‘big seven’ is forecast to grow only modestly over the coming months, with a challenging environment for expansion ahead, driven by tight on-farm margins and the lingering effects of adverse weather.

China is expected to increase its imports of dairy products in 2019 by double digits.

However, the uncertainty regarding economic growth remains.