TheDairySite Newsletter - 19 August 2011

TheDairySite Weekly Newsletter

Friday 19th August 2011

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Welcome to this week's newsletter

Editorial – Outlook Generally Positive for Dairy Sector

The milk production forecast for 2011 is reduced, according to the latest World Agricultural Supply and Demand Estimates from the USDA. Although the July Cattle report indicated that producers are holding relatively large numbers of dairy replacement heifers which supports a higher forecast dairy herd. However, recent hot and humid weather and relatively high priced feed may constrain the growth in milk per cow.

Milk production is forecast higher for 2012, reflecting a larger herd in the first part of 2012 but slightly slower growth in milk per cow. Commercial exports for 2011 are forecast higher on the strength of butterfat exports. Imports are lowered reflecting lower imports of cheese and milk proteins. Trade forecasts for 2012 are unchanged.

The 2011 milk production forecasts for the EU-27 have been increased slightly from those made in December with higher milk prices cited as the reason, according to DairyCo, which reports that higher input costs particularly for feed remain a major concern, despite improved efficiencies.

In contrast, the forecast for New Zealand has been revised downwards but still shows an increase of five per cent compared to 2010.

With higher milk production forecast, exports of dairy products by the five major exporters – Argentina, Australia, EU-27, New Zealand and the US – are forecasted to increase in 2011 with the largest increases for SMP (11 per cent) and WMP (four per cent) due to strong demand from Asia.

The US is expected to produce 890,000t of SMP in 2011 and export almost half of this, around 414,000t, an eight per cent increase on 2010.

Increasing levels of trade from the US will mean increased competition, which may add pressure to prices, according to DairyCo. One of the biggest dairy co-operatives in the US, Dairy America will begin selling milk products through the Fonterra auction system from October with SMP the first product to be offered.

The uncertain global economic outlook is also likely to mean prices remain volatile. However, strong WMP demand from China and higher feed costs which may impact supply, suggests that the outlook is still largely positive.

Jackie Linden

This Week's Feature Articles

We have 3 new features this week:

Corn - No Need To Choose Between Feed And Fuel
Beef and dairy farmers are better off since the implementation of the expanded Renewable Fuel Standard in 2007.

Feed Outlook - August 2011
Lower projected yields have reduced global production prospects, according to the latest report from the USDA Economic Research Service.

World Agricultural Supply and Demand Estimates - August 2011
Meat and poultry supplies are expected to remain stable while corn, wheat and oilseed supplies this month are forecast to be down, according to the August World Agricultural Supply and Demand Estimates.