The volume of milk in the most important export countries for dairy products fell even more sharply than originally estimated in the first half of 2013, namely by 2.8 million tons to 129.7 million tons. 0.6 million tons of this is due to the one day less in February than in 2012; this still leaves 2.2 million tons that dairy product manufacturers could have used to meet demand. This is because demand remains strong, driven by the growing purchasing power in so-called emerging countries and the efforts of the food industries to meet this purchasing power with a high-quality range of food products. After stocks were depleted last year, this decline in milk production has had an even greater impact on price trends. Of course, it is a coincidence that production fell almost simultaneously in the countries most important for supplying the international market. According to 2011 data, the EU, the United States, New Zealand and Australia together account for 43% of global cow's milk production and 72% of globally traded dairy products.
It also has much more to do with weather events than with cyclical fluctuations, as the feed supply for dairy cattle herds was characterized by poorer quality forage and high prices for purchased feed in both Europe and North America following weaker harvests in terms of quantity and quality last year, which had an impact until spring 2013. Added to this was the drought in New Zealand since the beginning of this year. If an initial overview of global trade in dairy products now shows stagnating figures or figures that fall short of the usual growth of recent years, this can be attributed to lower supply on the one hand and weaker demand due to sharply higher prices on the other.
It remains to be seen when and to what extent production will recover. In the United States, there is optimism for the rest of this year, but production will initially follow the seasonal pattern and decline until November. The situation is similar in the EU. However, it remains to be seen whether the basic feed supply here will be much better than last year. The harvests of grass silage and hay have suffered from the bad weather, which lasted until the end of June, and silage maize could perhaps make up for some of this. However, higher milk prices are creating incentives to increase the use of concentrates to compensate for deficits in basic fodder. As things stand, New Zealand is optimistic about what the new dairy year will bring. However, experience from the second half of the last marketing year shows that the country is even more dependent on weather events than in the northern hemisphere.
There is much to suggest that the global market and thus also the EU domestic market, which is closely intertwined with it via exports, will remain characterized by firm price trends at a high level until almost the end of this year. Even if prices then start to weaken, it is by no means certain that a sustained cyclical turnaround will occur.
| Milk production in selected countries | |||||
| 2011 | 2012 | 2013 | Δ'13 vs.'12 | Δ'13 vs.'12 | |
| 1st half-year, in million tons | +/-% | ||||
| EU 28 | 71,3 | 73,4 | 72,1 | -1,3 | -1,3% |
| USA | 44,9 | 46,5 | 46,5 | -0,1 | +0,4% |
| New Zealand | 7,4 | 8,2 | 7,2 | -1,1 | -12% |
| Australia | 4,1 | 4,3 | 4,0 | -0,3 | -7% |
| EU + 3 combined* | 127,7 | 132,5 | 129,7 | -2,8 | -1,6% |
| *) According to IDF data, the countries listed here accounted for 43% of global cow's milk production and 72% of exports of dairy products in 2011. | |||||
