Price stability justified for 2019
With subdued global milk supply growth, empty SMP intervention stores, a Brexit threat delayed well past peak and reasonable demand from China and Asia, all indicators point to stable dairy market prices after some earlier easing – which should spell stable milk prices. So, why should co-ops at this point commit to no further milk price cuts for 2019?
Supply growth negative in February
Worldwide milk production by the main exporting nations has gone into negative territory in February (see graph right).
This reflects the continued severe downturn in Australian supplies (down 12.6% for February, and by 6.4% for the June to February period).
Also down are EU supplies: for the combined January and February period, they were 0.6% down in volume, with Germany, France and the Netherlands well back. Exceptions worthy of note are of course Ireland and Poland.
US output was only up 0.2% for February, and growth there, which had been between 1.5% and 2% every month, year on year, has been much more subdued in recent months.
New Zealand had been forging ahead strongly through their October peak. However, it started the calendar year in reverse, with February supplies down 0.12%, and March supplies well back by 7.4%!
With global output growth stable to negative, markets have taken good note of likely scarcer supplies later this year – which has translated most clearly into 10 consecutive positive GDT auctions, the last one earlier this week.