The global dairy market is set for a troubled year as increased production meets weakening demand, a major US report has warned.
Recession in the US, Japan and the EU would dramatically reduce global demand for dairy products, claimed the US Department of Agriculture. Importers would therefore cut back on their orders to meet only short-term needs, it said.
The predictions come at a time of a “dizzying drop in global dairy product prices”, with non-fat dry milk prices plummeting 60% in less than a year and butter prices also nosediving.
Tight supply in the UK market has kept the country relatively insulated from global affairs, but analysts warned it would now come under pressure as cheaper dairy lines became available from abroad.
Despite the predicted weakening in demand, milk production is set to rise in almost all the leading producing regions this year, USDA said, with plentiful supply leading to the possibility of lower on-shelf prices.
Production in New Zealand is set to rise 8% as the country rebounds from severe flooding in 2007, Brazil is expected to increase 5% as it boosts exports in the face of a devalued local currency, and Argentina’s will increase 3% thanks to lower expected feed prices. Australian output is predicted to rise 2% after years of decline due to drought, while the US market will increase 1% as a result of a higher milk-per-cow ratio.
The EU, however, will see a negligible increase as declining milk prices and lower returns from exports take effect.
EU cheese production will rise after the EC green-lighted proposals to up quotas from 2009, but the increase will go to meeting rising domestic demand, the report claimed.
“EU exports and imports are not expected to change. However lower cheese prices due to building inventories and competition from Oceania and the US are pressuring processors and exporters to request the reintroduction of export subsidies,” said the report.
Recession in the US, Japan and the EU would dramatically reduce global demand for dairy products, claimed the US Department of Agriculture. Importers would therefore cut back on their orders to meet only short-term needs, it said.
The predictions come at a time of a “dizzying drop in global dairy product prices”, with non-fat dry milk prices plummeting 60% in less than a year and butter prices also nosediving.
Tight supply in the UK market has kept the country relatively insulated from global affairs, but analysts warned it would now come under pressure as cheaper dairy lines became available from abroad.
Despite the predicted weakening in demand, milk production is set to rise in almost all the leading producing regions this year, USDA said, with plentiful supply leading to the possibility of lower on-shelf prices.
Production in New Zealand is set to rise 8% as the country rebounds from severe flooding in 2007, Brazil is expected to increase 5% as it boosts exports in the face of a devalued local currency, and Argentina’s will increase 3% thanks to lower expected feed prices. Australian output is predicted to rise 2% after years of decline due to drought, while the US market will increase 1% as a result of a higher milk-per-cow ratio.
The EU, however, will see a negligible increase as declining milk prices and lower returns from exports take effect.
EU cheese production will rise after the EC green-lighted proposals to up quotas from 2009, but the increase will go to meeting rising domestic demand, the report claimed.
“EU exports and imports are not expected to change. However lower cheese prices due to building inventories and competition from Oceania and the US are pressuring processors and exporters to request the reintroduction of export subsidies,” said the report.
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