Shrink­ing dairy herd

Rabobank quar­terly re­port notes global dairy growth slowed

The Northern Star - Northern New South Wales Rural Weekly - - NEWS - Pe­ter Hem­phill news@ru­ral­weekly.com

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

❝Sur­plus 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 weather”.

“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.

DRY IM­PACT: The dairy in­dus­try is feel­ing the ef­fects of the ongoing drought in much of Aus­tralia.

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