Global milk production rises

GERARD HUTCHING
Last updated 14:46 13/08/2014

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Major dairy exporting countries have upped their milk production in the past year, with the European Union and the United States experiencing the largest growth in exports.

Fonterra's latest Global Dairy Update reports that EU and US export growth rates are tailing off, while New Zealand's have increased in recent months.

Global demand for dairy has fallen in response to oversupply, while China is still working through its stockpile.

Nevertheless, the US Department of Agriculture says underlying demand from China will continue to be driven by rising incomes, growing urbanisation and expanding population.

ASB economist Nathan Penny said higher production in the EU and US reflected the opportunities exporters saw.
 
''The question is around the US, whether they can increase their export share because their production is still pretty modest but the potential is there for them to switch production into exports. At present only 15 per cent of their production goes into exports.''

While export growth from the EU dropped, it still remained 12 per cent ahead in May 2014 compared to May the year before.

New Zealand's export rates showed an upward trend in April and May this year, at 10 per cent growth.

Milk powder exports from New Zealand, the EU, Uruguay and the US were mainly responsible for the global export growth.

Cheese export rates fell off in May for New Zealand, the EU and Australia.

Cheese exports to Russia from the EU have fallen by 11 per cent in 2014.

New Zealand milk production in July reached 24 million kilograms of milksolids, 2 million kg ahead of the same period the year before.

Penny said he would not read much into the July figures, since production was traditionally at its lowest then. Last July's production was only 1 per cent of total production for the year, he said.
 
''t this stage of the season I'm not looking for any hints on where things are going. I usually park July aside and wait for later months' reports to roll in. In October-November we are producing 250m kg/ms.''
 
Production from Argentina and Uruguay, on a par with that of Australia, has fallen by 6.3 per cent following poor weather and unsettled economic situations.
 
Penny said there was potential in the short-term for New Zealand to find a market in Russia, but he predicted the Russian economy would ultimately slow and demand ease for dairy and other products.

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