Friday, July 8, 2022

Global milk production depressed

Milk output across the four largest dairy exporting regions has fallen short of year ago production levels for at least the past four months.  

This trend is starting to correct itself with the US the first of the major dairy producers to show signs of growth.  The EU is likely to follow as they move through the Northern Hemisphere summer period.  However it will be some months before the milk really starts flowing from Southern Hemisphere producers.  

The New Zealand dairy season draws to a close at the end of this week.  The majority of cows here will enjoy an extended break as many were dried off much earlier this season than would normally be the case.  Calving typically commences in July in northern parts of New Zealand, whilst farmers in the deep south usually opt not to start calving until August.  Calving is timed so that feed demand from cows coincides best with the peak in the seasonal pasture production curve.   Milk prices are generally improving across the globe while feed prices are generally expected to recede.  This is expected to boost farmer confidence and expansion in milk supplies is likely to follow.  New Zealand producers, who are fully exposed to the volatility of global dairy markets, will benefit from high commodity prices to a greater degree than farmers in other countries.  But at the end of the day (or season) it is the weather that has the greatest influence on production levels in pasture based production systems, not milk prices.   


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