Shrinking of dairy herd
Rabobank quarterly report notes global dairy growth slowed
DROUGHT in both the northern and southern hemispheres’ dairy regions has sapped global milk production.
In its latest quarterly dairy report, specialist agricultural lender Rabobank said year-on-year growth in milk production by the largest seven exporters had slowed from 4 per cent in late 2017 to just 1 per cent for the third quarter of this year.
Australia and New Zealand are among the top seven exporters, along with the US, European Union, Brazil, Argentina and Uruguay.
Rabobank said hot and dry conditions had shrivelled pastures in Australia and drought in parts of northern and western Europe had reduced milk volumes.
Drought was likely to be an influencing factor in the global dairy market during 2019.
“The impact of more expensive feed costs and tighter margins for milk producers globally are now very evident and will continue the squeeze into 2019,” the bank said.
“National dairy herd numbers are shrinking in Australia, Europe and the US as a result of producers scrambling to manage costs.
“With the exception of New Zealand, milk prices are now moving higher in a number of regions as production growth is tested.
“Further increases in farmgate milk prices are DRY IMPACT: The dairy industry is feeling the effects of the ongoing drought in much of Australia.
dairy (produce) available for export will significantly tighten for an extended period, which will provide some upside to pricing across the dairy complex...
— Emma Higgins
needed to negate the higher input costs and to improve volume growth.”
Rabobank NZ global strategist and lead author Emma Higgins said milk
supply would only grow modestly during the coming 12 months.
This was driven by tight margins on farms and the “lingering effects of adverse
“Surplus dairy (produce) available for export will significantly tighten for an extended period, which will provide some upside to
pricing across the dairy complex.”
Rabobank said global prices would need to rise to offset the higher input costs farmers now faced.