Milk in key exporting regions
%-change versus previous year
Europe
Downward potential until the end of the year appears to be absent in liquids
After a short period of relative stability prices in liquids started moving up again. Blue Tongue injects additional nervousness in an already very tight EU liquids market. The word is still out on the real fundamental effect down the road but today’s impact on prices can hardly be downplayed. Liquid milk trades at EUR 0.63 in Germany and the Benelux. In France where the pressure is slightly less and milk availability is somewhat better milk is traded at EUR 0.60. Latent demand is still significant but very few buyers are willing to commit to volumes further out. Cream is traded at prices near the EUR 10-mark. It is hard to identify downward potential in the liquids market for the remainder of the year.
Americas
Any minute now?
Markets expect US milk production to turn positive soon. After all, the margin outlook is expected to improve significantly, from the milk price end as well as the feed cost end. Still, July milk production growth was negative and the June number was even revised downward. The Avian Flu impact continues to play a negative role, particularly in California at the moment. South American production also continues to disappoint both in Argentina and Uruguay. Milk output is bound to improve at some point in the near future – also because it can hardly get worse – but when that will happen is still anybody’s guess.
Asia-Pacific
Probably solid start of the Oceania season
The Oceania season appears to kick off on a positive note. Data to back this up are not available yet but the margin outlook for dairy farmers in New Zealand and particularly Australia is favorable. The season’s starting price is already more than OK and additional price increases seem to be inevitable. What this means in terms of actual volumes depends therefore on the physical production circumstances and weather conditions. Things tend to be a bit shaky at the start of the season in New Zealand and soil moisture looks a bit on the high side on the Southern island but nothing too dramatic yet. At this point in the season Oceania looks capable of providing a least some comfort to the buyside in the Asia Pacific markets.
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