Milk market 2014: an outstanding sales business in 1st half - falling prices in the summer months – and the rest of the year?
The semi-annual assessments Agriculture Department (USDA) to the milk market in 2014 emanating from a twice as high increase in global milk production by 2.7% compared to the previous year. This, the increase of the cow population plays an important role as the milk performance per cow compared to previous years. Even on the intensive sites of the EU, United States and Canada, this observation applies also to a lesser extent. Drive torque are the high milk prices of the recent past that have animated to investment in the dairy industry.
In the first half of 2014, the increase in the supply of milk products was caught largely by an exceptionally high demand especially from China. The Chinese imports increased for the same period by + 89% in the case of MMP, and + 70% of whole milk powder. Even if the volumes are still low, a new phase of Chinese imports of butter and cheese, which have achieved increases of + 67 to + 121% compared to the previous months in recent starts. This includes UHT milk, which interestingly comes to 40% from Germany. Higher transport costs seem to be the Chinese value to get a guaranteed product.
The Chinese Government has adopted strict hygiene and quality rules for the dairy sector to dismantle fundamental distrust of local products. However, the Melaminskandal seems so persistent in the consumer consciousness anchored to that no fundamental change in consumer behavior is observed. At the same time the new rules be contra productive for the small-scale Chinese dairy industry, the production of which don't really want to move forward despite State subsidies.
The United States, which have to fight California and the southern States with the aftermath of the drought on their central locations still have difficulty with the increase in production. Largely unchanged herds and stagnant milk yields lead to zero growth in the year 2014. A weak domestic demand will release foreign sales in the MMP sector. The US export profits from the Chinese cheese boom.
China's rising cheese imports benefit also of the EU. However, an Exchange between the blocked cheese exports mainly occurs after Russia and the rising China imports, without requiring a significant increase in exports to the EU in the cheese sector comes out. However, the export increases are of + 31% in the case of MMP all the more striking. The EU milk powder sales to third countries achieved significant 15% increase. Algeria and the Middle East are at the top of the list. The butter export is in positive territory, but remains a difficult business.
The 3% increase in milk production in the world's largest production area of EU could be coped with 2014 relatively well in the first half of the year with rising exports. For the second half of calculated with a declining EU milk deliveries while seasonally, is still above levels of the previous year.
While Australia zero growth towards looks, expects an increase in production by + 4% New Zealand for the year 2014 compared to a very weak previous year. Currently the cows are still largely dry. In August, starts the new Milchsaison and will reach its climax in October 2014. Although the production increase to 100% in the export goes, but the quantities of additional 1 million tons of additional milk production are manageable on the total market of almost 500 million tons of the most important production areas measured.
The prices for dairy products have decreased 2014 significantly after a strong initial phase in the first half. The latest GDT auction in mid-July 14 pushed average prices below the long-term mean. The absence of the average China purchases still in the spring/early summer has impacted significantly. For the second half of 2014 is expected with a price consolidation at a low level, but it requires a strong demand from China, though not in the excessive weight of the first six months of the year 2014.
The significantly reduced world market prices for dairy products will move also affected the EU milk prices. The rate adjustments in Europe be regularly violent in comparison to New Zealand. In the Gegenzuge, the EU has an internationally almost unrivalled fresh product business.
