A US dairy expert has told attendees at a Canberra conference that the slowdown in global milk supply growth has 'set the stage' for a recovery in milk prices for dairy producers around the globe.
As a keynote speaker at last week’s Australian Dairy Conference, Rabobank’s global dairy strategist Mary Ledman told a crowd of over 400 dairy farmers and industry leaders that a “supply deficit was likely to be a feature of global dairy markets into the more medium-term, as consumption growth (particularly in developing countries) is pegged to rise at a fast rate that will challenge supply growth to keep pace”.
“Our modelling of dairy supply and demand out to 2023 suggests there could be a global trade deficit of 4.4 million tonnes (milk equivalent) in five years’ time,” Ledman said.
“However, that said, if the world is demanding 101.2 million tonnes of milk equivalent, and is only supplying 96.8 million tonnes of milk equivalent, I have no doubt dairy farmers will produce it.”
Ledman said the milk prices of 2015 to 2018 are likely to become the ‘new norm' but as global prices have been tempered by intervention stocks in the EU, she thinks Australia has already seen the impact of that 'big bang'.
Rabobank’s locally-based senior dairy analyst Michael Harvey also attended the Australian Dairy Conference and said the recovery in global prices should flow into better local farmgate prices in Australia but that the local dairy sector faces a 'number of headwinds'.
“The biggest challenge facing the industry is the decline in its milk production, with production at two-decade lows,” Harvey said. “And with a slow recovery in Australian milk production forecast, we are not likely to have more milk to export.”
Harvey said this supply shortage comes at a time when China, Australia's largest export market, continues to have strong growth demand prospects, as do other key importers such as Indonesia.
