Global milk production makes gains, but losing momentum - Rabobank

Growth attributed to EU and US gains
calendar icon 7 June 2023
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Global milk production is still growing but losing momentum, according to Rabobank's second-quarter Global Dairy report

After a prolonged contraction of five quarters that ended in Q3 2022, global milk production began expanding modestly (against weak comparable numbers). Growth is attributed to EU and US gains, while Oceania and South America continue to see lower output in 1H 2023. Dry weather in South America and parts of Europe must be monitored and could be a key factor impacting production, particularly in Europe, during Q3.

Lower input costs provide some relief to farm-level margins. Continued optimism about Brazil’s second corn crop, combined with large Russian grain exports, renewal of the grain corridor agreement between Russia and Ukraine, a good upcoming EU harvest, and accelerated US corn planting, continue to drive prices lower. More affordable feed provides dairy farmers some relief as farmgate milk prices decline globally. In the US, however, lower milk prices have outpaced the decline in feed costs, putting farmers’ margins under additional pressure.

Chinese milk production growth continues while imports decline. Farm expansions and continued gains in milk yields are driving domestic milk production higher. Meanwhile, Chinese dairy imports (liquid milk equivalent, excluding whey) declined in Q1 2023, adding pressure to already weaker global prices in the short term.

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