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January Global Dairy Update

Thursday, 31 January 2019 at 11:47am

This update is a summary of the key markets milk production and export information provided by Fonterra in their January Global Dairy Update publication.  

Production In Key Markets

Total New Zealand milk production increased 4% in December compared to same month last year and is up 2% for the 12 months to December 2018. Favourable weather conditions supported peak collection with production returning to more usual production levels following two previous seasons that were impacted by weather.

Australian milk production decreased 6% in October compared to the same period last year.  Drought, high input costs and increased cow cull rates, continue to severely impact milk production.  Dairy Australia has forecast a milk production decline of 5% to 7% for the season.

European Union milk production decreased 1% in November compared to the same period last year.  In November the Netherlands experienced the largest monthly decline and France and Germany also continued to decline.  Stronger milk production continues in Ireland. Production for the 12 months to November was up 1% compared to the same period last year.  Growth has slowed but has remained steady since August.

US milk production was up 1% in November compared to the same period last year.  The US continues to see relatively steady production growth driven by increased yield per cow.  Margins continue to be squeezed with Class III milk below USD15.00 per hundredweight. The new Dairy Margin coverage programme may assist production on smaller farms but overall US growth is expected to continue at current levels which are below those observed over the past several years.

 

Exports in Key Markets

Total New Zealand dairy exports increased by 13% or 40,000 MT in November compared to the same period last year.  This was primarily driven by whole milk powder (WMP), up 27,000 MT. Fluid products, AMF, SMP, MPC and infant formula were up a combined 22,000 MT.  Butter declined 9,000 MT. Exports for the 12 months to November were up 1%, or 43,000 MT, on the previous comparable period. This was driven by fluid products, WMP, infant formula, AMF and butter, up a combined 114,000 MT.  This was offset by declines in SMP, cheese and cultured products down a combined 61,000 MT.

Australian dairy exports increased 13% , or 9,000 MT in November compared to the same period last year.   This growth was due to infant formula, fluid products, SMP and butter up a combined 10,000 MT. This was offset by a decline in cheese of 1.500 MT.  Exports for the 12 months to November were up 6%, or 41,000 MT on the previous comparable period. Fluid and fresh dairy, cheese and infant formula continued to make up most of growth in Australian exports, up a combined 35,000 MT.

European Union dairy exports increased by 12% in October compared to the same period last year.  This was primarily driven by SMP, fluid products, cheese, lactose and WPC up a combined 53,000 MT.  Exports for the 12 months to October were up 1% on the previous comparable year. There was continued growth in a broad range of products, led by infant formula and SMP, offset by declines in fluid milk products and WMP.

US dairy exports increased by 3% in October compared to the same period last year.  Growth in SMP, WMP and AMF of a combined 15,000 MT was the primary driver behind this increase.  Exports for the 12 months to October were up 13% on the previous comparable period. The increase was across a broad range of products, notably SMP, lactose, WPC and WMP up a combined 231,000 MT.