W6: Weekly Dairy Update
Milk
Europe: The Price of Cow’s Milk in Europe Starts 2023 Down, Losing USD 0.54 to USD 61.30/100 KG (Feb 6)
The first data offered by the Cow's Milk Market Observatory in Europe, corresponding to the month of January 2023, show a drop in the price of this product of USD 0.54 (0.5 euros) to USD 61.30/100 kg (56.97 euros). It is the second consecutive month in which this drop has been seen, thus breaking an upward trend that had been coming since January 2021. However, despite this slight reduction, there is an increase of 36.2% compared to January 2022, since at that time the average value was USD 44.99 (€41.81). Among the main producers, Ireland, Poland and, especially, the Netherlands are the ones that show a drop in January 2023.
New Zealand: Continuous Milk Production Under Pressure (Feb 6)
For the year 2022, New Zealand milk production, in kilograms of milk solids, was 3.5% lower than the previous year and 3.8% lower in terms of tons. This is equivalent to 835K MT of production, which makes it clear that milk production in the country is under pressure. Despite these annual data, December production was positive, being 0.6% higher than the previous year, with 1.2M kg of milk solids produced more in the month. With weather conditions during November rapidly changing from a wet, cold and dreary spring to a warmer and wetter early summer, there was little doubt that the December production data would indeed bring significant changes over the previous season's data. However, that 0.6% increase is impressive considering how bad the season started, lower cow numbers on New Zealand farms, along with the negative pressure reported on farms by producers.
The Minister of Agriculture and Rural Development, Henryk Kowalczyk, met with representatives of dairy cooperatives in W5 to discuss the current situation in the sector and on the dairy market. After discussing the market situation, representatives of dairy cooperatives held a discussion with the Minister of Agriculture, during which many issues important for the dairy industry were discussed. Czesław Cieślak, president of OSM in Koło, emphasized that the problems in the dairy industry primarily concerned the sale of dairy products. The problem of trade should be solved through an agreement between milk suppliers, processing plants, retail chains and consumers, because in Poland they often exclude each other. It must be admitted that the prices of dairy products rose to astronomical levels last year and there was a certain imbalance in consumption, especially butter and cheese.
US: USDA Calls for Limited Milk Production and Lower Prices in the US (Feb 8)
The USDA expects reduced milk per cow and a smaller herd to cause milk production to decline in 2023. In its February supply and demand report, USDA lowered cheese prices because of large stocks and soft domestic demand. Non-fat dry milk and whey prices were also lowered because of increased export competition and lighter global demand. Butter prices were unchanged as higher earlier-year prices are likely to be offset by weaker prices later in 2023. USDA is forecasting Class III and Class IV prices to decline, pressured by lower product prices. The 2023 all milk price forecast was reduced by 90 cents to USD 20.70.
US: Most Dairy Markets Come Back Strong (Feb 8)
Dairy markets have digested a lot of bad news in recent months. A renewed focus on the economic and demographic slowdown in China and a shift towards higher milk production in the US and Europe emboldened the bears. In Chicago, cash dairy and milk contracts hit multi-year lows in January. The powders were particularly pitiful. But in W6, most markets came back strong. It appears that the dairy trade may have been overly pessimistic. Last week's milk production report showed slower-than-expected growth in US milk production, and this week the USDA hit the dairy complex with two more pieces of data suggesting slow growth ahead. Just 2.77M dairy heifers were expected to calve and enter the milking herd this year, according to the agency's annual Livestock report.
US: Dairy Exports Set New Records in 2022 (Feb 10)
US dairy exports finished what was an already stellar year with gusto, according to a monthly market update from the US Dairy Export Council (USDEC). YoY exports grew 21% in December (+USD 128M), putting total 2022 value at over USD 9.6B, up 25% (+USD 1.9B). Compared to December 2021, most major export products grew in December 2022, with cheese up 16%, non-fat dry milk/skim milk powder up 8%, whey products up a combined 20% and lactose up 30%. Of the major products, only butterfat and fluid milk/cream were down, about 4% each. Total annual volume topped 2.57M MT, up nearly 6% from a year earlier.
India: How Did India Manage to Become the World Leader in Milk Production? (Feb 12)
Mentally linking cows with India is the best representation that can be had of a fundamental activity for that country, not only because of the sacred characteristic of the animals that represent the mother, and for this reason they are so respected, but because they have established themselves as the world leaders in milk production. In September 2022, on the outskirts of Delhi, the World Congress of the International Dairy Federation was taking place, where the Hindu Prime Minister Shri Narendra Modi was present, showing the absolute political support that an activity like this needs to expand. The occasion served for India to tell the main dairy countries face to face that it is a global leader in production, showing the productive characteristics, the available technology, a vast catalog of dairy products, but also its challenges, such as getting vaccinated to the entire cattle herd this year. A country that shows remarkable socio-economic progress, although with questionable policies in many aspects, does understand that supporting agricultural production is what has allowed it to make progress in the fight against poverty. Dairy globally has three challenges: improve nutrition, sustain quality of life and increase supply.
Ukraine: Almost 300 Ukrainian Dairy Farms Received Help From Switzerland (Feb 8)
At the start of the implementation of the project, farms that were forced to relocate animals to the neighboring region, but have already returned to their original capacities and continue their production activities in the Kharkiv region, joined. Due to the project, it was possible to cover 68% of the registered production capacities of the Kharkiv region, in which more than 64K cattle were kept, including more than 25K cows. In order to preserve the production potential following the de-occupation of the territories, 64 farms within the framework of the humanitarian project received the necessary means for washing and disinfecting milking equipment, pre- and post-milking treatment of udders, napkins for udder hygiene, gloves, milk filters, reagents for detecting hidden forms of mastitis, disinfectants for livestock premises, and more, which will fully cover their quarterly needs.
Russia: The Dairy Union Announced a Possible Drop In Milk Consumption by a Third (Feb 9)
According to the Dairy Union of Russia, milk consumption in the country may decrease by 20-30%. This was stated by the head of the union, Lyudmila Manitskaya, during the All-Russian Congress of Milk Producers and Processors. She also noted that the demand for dairy products will shift to budget categories, this is facilitated by a number of factors. First, there is a decrease in the income of the population. In addition, in the last three years, the production of raw milk in Russia has hardly increased. According to the union, in 2022, production was at the level of 32.5M MT, slightly higher than in 2021 (32.3M MT).
Chile: Chilean Dairy Exports Increase 25.5% In 11 Months of 2022 (Feb 7)
The Office of Agricultural Studies and Policies (Odepa) of Chile released its bulletin on the dairy sector, where it was informed that the volume of Chilean exports of these products grew by 17.2% between January and November 2022, while their value increased by 25.5 %. In the first 11 months of 2022, 85.45K MT were exported for a value of USD 241.93K. In the same period of 2021, Chile exported 70.74K MT of dairy products, for a value of USD 180.16K. Of the total exported, among the products with the best performance was condensed milk, with 28.61K MT exported for a value of USD 56.19K.
Bulgaria: Price of Raw Milk in Bulgaria Has Increased by 42% In a Year (Feb 6)
According to EC data, the purchase price of raw milk in Bulgaria has increased by 42% in a year. This is stated in a report on the dynamics of the raw milk market in the EU countries, Great Britain and Ireland. Against the background of the traditionally optimistic figures from Brussels, Bulgarian cattle farmers are alarming about a decrease in herds and a severe crisis due to expensive feed and electricity. According to Mihail Mihaiilov, chairman of the Bulgarian Cattle Breeders' Union, only the large farms that have other businesses from which they are financed are expected to remain on the market. In the Burgas region, spending in the sector has increased by about 40% compared to last year. According to SAPI data, as of January 18, 2023, the average purchase price of cow's milk is USD 0.59/liter (BGN 1.07). On an annual basis, the price increase is by 33.8%, and on a monthly basis by 0.9%. With the highest jump YoY is fresh tetra pack retail milk.
Butter
Tridge Analysis: Dairy Trade Price Index up 3.2 %, Its First Price Rise in 2023 (Feb 8)
The GDT auction held on 7th of February saw its overall price index going up 3.2% from the last event and an overall average price of USD 3,456/MT. It's the first rise in 2023 which is making some market insiders suggest the bottom has been reached following a general weakness during most part of last year. Butter made the biggest gain, up 6.6% to an average price of USD 4,745/MT.
