Milk in key exporting regions
%-change versus previous year
Europe
Liquids prices do not support commodity production
The EU liquids market is very firm at the moment. In the region only Poland and the UK have strong milk production. As a result milk prices in spot markets are too expensive to make commodity production economically viable. In Germany spot prices are EUR 0.50, in the Netherlands and Belgium EUR 0.55 and in France EUR 0.48, all ex works. The tight milk fat market raises cream prices to a level of EUR 8.70 ex works in Western EU, which is too high to make butter processing viable at today’s butter price. The wait is for stronger milk production in Q2 but it is already unusual that liquids prices do not support commodity production this close to EU peak production.
Americas
The potential is there for a stronger US export role
US milk production has the potential to create comfort for international buyers going forward. Content levels are already high and when California’s weak production situation further recovers, availability of both fats and proteins will be sufficient to facilitate a stronger export role for US dairy. The issue is whether international buyers are willing to rely on the US supply base given the bigger geopolitical objectives that are at play in US politics at the moment. The rest of the world could certainly use more US supply but it remains to be seen if that potential can be opened up in 2025.
Asia-Pacific
Oceania output may weaken in the remainder of the season
Oceania milk availability may once again disappoint in the remainder of the season. Last year the season ended too wet, this year things are too dry on the Northern island of New Zealand. Volumes on offer at the upcoming GDT sessions also suggest that availability of milk may weaken going forward. Australian supply already turned negative against previous year’s comparables, but it was expected that NZ would be able to offset given last year’s weak ending of the season. Based on the latest developments this expectation may have to be revised.
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