Eoin Kelly, Consumer and Market Insight, Bord Bia-Irish Food Board
The latest Rabobank dairy report for the first quarter of 2016 is pointing towards a continuation of the current weakness in the market however some small signs of growth are appearing. The following article briefly looks at some of the key regional findings in the report compiled by Rabobank.
Regional Outlooks
•EU: Rabobank have noted average production has continued to rise particularly in Ireland and the Netherlands however price pressure is likely to dictate production gains in the next quarter of 2016. Last year despite the Russian embargo, favourable exchange rates coupled with surplus stocks resulted in a rise in exports particularly to Asian markets however a lower oil price resulted in lower demand from oil rich countries in the Middle East and North Africa.
•US: Supply growth so far in 2016 has been slow due to contrasting regional supply. Domestic demand (particularly for butter and cheese) has risen and imports have grown due to surplus global supplies while exports have declined due to subdued world demand. Overall for 2016 production is expected to remain stable with demand rising and ultimately reducing its exportable surpluses.
•New Zealand: Supplies have continued to hold strong however it is anticipated that herd expansion will be low and ultimately milk production is forecast to slow in the second half of this year and into next year. Exportable volumes have peaked seasonally and at this stage are forecast to be 3% to 5% down on last year.
•Australia: Poor seasonal conditions due to very hot temperatures are having an adverse effect on pasture growth. Overall for the year based on prevailing milk supply, production is likely to come under some pressure and is forecast to be back by 2% in the 2015/16 season. Exports are quite strong at the moment but surpluses are anticipated to become tighter later in the season.
•China: Milk supply forecasts are pointing towards a small decline in the first half of 2016 followed by a rise in the second half of the year with a further rise anticipated at this stage for 2017. In terms of imports some growth is expected in the second half of 2016 on the back of stable demand.
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