Intriguing Year Expected for Global Dairy Sector

The coming year is expected to be an “intriguing” one for the global dairy sector according to analysts at Rabobank.

Through the autumn of 2013, Whole Milk Powder values tracked around $5,000 after the spring spike.

Higher prices seen through 2013 are expected to remain until the second quarter 2014, when they will ease.

But, Rabobank says that this drop will be limited, amid growing Chinese demand and inventory replenishment.

“The rate of price reduction will be limited by structural constraints on suppliers, the need to replenish depleted buyer inventories, and on-going demand growth in line with a slow economic recovery,” Rabobank said.

The production spike relates to all key export regions from 13 August up to October, excepting Australia, where production was back 4.3 per cent because of the continued drought.

Meanwhile Europe enjoyed a better summer, producing 3.6 per cent more milk year on year.

A ‘looser’ market should be created by strong northern hemisphere production following an ‘exceptional’ southern hemisphere season, which will all meet China’s needs.

Farmgate prices around the world are also predicted to be strong, assisted by lower corn and soybean prices.

Rabobank believes that 10 to 40 per cent falls in grain and soy prices will buoy intensive feeders and in particular, South America is expected to raise production of milk.

This has already been seen in Brazil, which coincided with record prices, up 27 per cent, despite inconsistent consumption.

Rabobank also forecasts that Argentina is set to benefit from improved feed costs, although economic uncertainty means dairy investment has been lacking, and this will hit exports.

Meanwhile, the dairy sector in New Zealand has welcomed the latest government stance to control the use of antibiotics.

DairyNZ and the Dairy Companies Association of New Zealand (DCANZ) say that the Ministry for Primary Industries (MPI) report on antibiotic sales highlights the on-going importance of animal owners working with their veterinarians to carefully manage antibiotic use.

"Antibiotics are an important tool in managing diseases for both humans and animals. Ensuring their future effectiveness is in everyone's interest. The dairy industry's position on antibiotic use is to use as little as possible without compromising animal welfare," said DCANZ Executive Officer, Kimberly Crewther.

"Prevention is the best approach and the New Zealand dairy industry has a strong focus on animal health management systems that prevent the occurrence of disease. This is especially the case for the key areas of lameness and mastitis," she added.

DairyNZ's Chief Scientist Dr Eric Hillerton said the mastitis rate in the New Zealand dairy herd is less than half that reported from the USA and a quarter of that in the UK.

"Animal health management is a partnership between dairy farmers and their veterinarians," he said.

"Prudent use of antibiotics prescribed by veterinarians, along with key disease prevention and treatment strategies, is essential to minimise disease and safeguard animal welfare. “