Milk prices: separate economy, seasonal and rate effects

Future milk price development right classified

The end of the milk quota system is frequently associated with the expectation of an unchecked increasing milk production in conjunction.  Falling milk prices are derived from this. It is therefore the risk that future milk prices are indiscriminately attributed to the ratio effect.

First of all, it should be noted, that the milk price in this country - even as the recent past under quota conditions - is much of their export earnings on third-country markets dependent on . The payout rates fallen since mid 2014 to 40% are a consequence of the Russian import barrier and China's stagnant imports at simultaneously worldwide price-induced increases in production.

The dramatic global decline has reduced considerably the increasing world milk production. At the beginning of the year price recoveries identified due to temporarily close available quantities of already again. In recent times, the prices of milk products again display weakness tendencies that drag until the middle of the year 2015.

The incoming milk prices in the next few months will be marked next to the expiring economic effect in particular by season-typical supply and demand developments. While in the southern hemisphere (New Zealand, Australia, Argentina) almost exclusively pasture milk production due to declining feed generation towards zero down shuts, it comes in the northern hemisphere with a focus on Europe and the United States to an early summer offer high.  

Between the lowest and highest (in Oct) delivery (in June) is New Zealand a difference of approximately 3 million tonnes. In the March 2015 has been the New Zealand milk production at 1.5 million tonnes. For the EU, an average seasonal increase of about 2 million is  t per month until May / June before.  In the United States, the feed-based milk production at a high performance level of 10,000 kg cows leads to comparatively low seasonal supply fluctuations to 0.5 million tonnes.

At the world level is therefore an typical season increase in supply with a focus in the EU can be expected. Seasonal increase in consumption in the form are higher sales of fresh milk and the cream freezing for the winter butter.  The production of storable products such as milk powder and cheese usually increases during the summer.

In the average of the years go milk prices usually in the late spring / early summer seasonal back. In a few years as 2013 in global milk shortages, the economic effects overlay the typical course of the season. Conversely, the General market and price developments reinforced the seasonal price decline in 2012.  

The year 2015 starts at a low price level from the o. g. reasons. A recovery of the global milk market is emerging in outline. A runaway inflation the previous supply demand conditions not sufficient for the time being. Therefore, it is assumed that the seasonal factors for the next few months for a low in certain bandwidths of fluctuating price levels will be decisive.

An not to exclude rate effect is only a 30 to 40% share of EU production. In the EU as a whole, the quota was met 2014/15 to 98%. Only a few EU countries have considerably exceeded the quota requirements.  Currently, the low prices act as a brake for further production increases.

Cyclical and seasonal effects mix with a not to exclude rate effect. Last should not be overestimated however.

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