1. Weekly News

Global

Rabobank Forecasts Modest Growth in 2025 Global Dairy Production

Dutch multinational banking and financial services company Rabobank anticipates global milk production to increase by 0.15% year-on-year (YoY) in the second half of 2024 (H2-2024) and grow 0.65% YoY in 2025. In the United States (US), milk production is expected to increase by 0.4% YoY in 2024, and production in 2025 is projected to grow by 0.7% YoY. In France, the milk supply is forecasted to increase by 1% YoY in Q3-2024 and 1.5% YoY in Q4-2024. In addition, China's milk production increased by 3.4% YoY in H1-2024 and is expected to grow by 2% YoY in H2-2024.

Argentina

Argentina’s Milk Powder Price Increased by 33.75% YoY in Aug-24

In Aug-24, Argentina’s milk powder prices increased by 33.75% YoY to USD 3,408 per metric ton (mt), compared to USD 2,548/mt in Aug-23. The price increase can be attributed to declining local production and border conflicts. Butter and cheese production also experienced similar declines, further exacerbating the supply tension. Argentina’s dairy industry has been stagnant for decades, with its last significant growth occurring during the 1990s, a period marked by clear regulations and stability. However, the sector faces interventionist policies and severe climatic difficulties, underscoring the urgent need for structural changes to ensure its recovery and long-term sustainability.

New Zealand

New Zealand to Reinstate Livestock Exports

The New Zealand coalition government plans to reinstate livestock exports by sea, aligning with enhanced animal welfare standards similar to Australia's Exporter Supply Chain Assurance System (ESCAS). This move raises expectations that Australia's coalition government may also lift its ban on livestock exports by 2028. New Zealand has banned live animal exports for breeding and milking cattle since Apr-23, but the government is now drafting legislation to restart the trade under world-class welfare standards. Meanwhile, sheep producers in Western Australia are closely watching developments in New Zealand, hoping for similar changes to bolster their industry.

Ukraine

Ukraine's Cattle Population Declines Amid War and Rising Production Cost

As of August 1, 2024, Ukraine's cattle population has decreased to 2.36 million heads, dropping 13.3 thousand heads month-on-month (MoM) and 175 thousand heads YoY. This reduction is due to rising production costs and the war with Russia. In particular, 61% of the country’s cattle are kept in households, while the remainder are raised in industrial enterprises.

Ukraine's cattle population was negatively affected by the war, leading to deaths due to shelling and a decrease in investment. Farmers also face increased production costs, which are outpacing the prices of finished products, creating significant financial strain. Despite these challenges, there is optimism in relatively safer regions of Ukraine, where dairy farms are modernizing and expanding their herds with highly productive cows.

United States

California Investigating Potential H5N1 Virus Outbreaks on Dairy Farms

California is investigating three potential avian influenza outbreaks at dairy farms in San Joaquin Valley. Samples collected from the affected farms are being analyzed in laboratories to determine if the cows have contracted the avian influenza (H5N1) virus. The California Department of Food and Agriculture (CDFA) has reassured the public that pasteurization effectively prevents dairy products from being contaminated by infected cows. Although the risk to humans remains low, the potential for these suspected outbreaks to cause significant damage to livestock is concerning. If any test results confirm the virus’s presence, California will become the 14th state to report an outbreak of bird flu on dairy farms.

2. Weekly Pricing

Weekly Powdered Milk Pricing Important Exporters (USD/kg)

Yearly Change in Powdered Milk Pricing Important Exporters (W35 2023 to W35 2024)

Germany

Germany’s powdered milk prices increased by 1.28% week-on-week (WoW) to USD 3.17 per kilogram (kg) in W35 compared to USD 3.13/kg in W34. The MoM and YoY prices increased by 6.78% and 2.59%, respectively. Germany’s milk prices have been trending upward since the middle of 2023 due to rising production costs and low productivity. The recent bluetongue virus outbreaks in dairy farms further enhanced the prices due to a potential reduction in raw milk supply.

Belgium

In W35, Belgium’s powdered whole milk prices increased by 1.6% WoW to USD 3.81/kg from USD 3.75/kg in W34, marking the fourth consecutive week of price increases, driven by overall global market trends. The country’s dairy cattle population has declined since 2023 due to high feed and low milk prices. Despite this, the country’s milk yield has increased due to genetic livestock improvements and sustainable business practices. In addition, the country’s organic sector is also experiencing growth due to high demand.

Netherlands

Skimmed milk powder prices in the Netherlands fell by 0.39% WoW in W34, reaching USD 2.57/kg, down from USD 2.58/kg in W34. However, the MoM and YoY prices increased by 11.26% MoM and 11.26% YoY. Despite this weekly price fluctuation, high temperatures in Jul-24 and Aug-24 negatively affected the country's milk production. Late grass growth and trampling made it challenging to manage through the peak of the milking season.

France

In W35, France’s semi-skimmed milk powder prices remained unchanged at USD 3.92/kg in W34. The MoM and YoY prices increased by 4.53% MoM and 61.35% YoY. France’s milk supply has fallen sharply due to the warm weather and bluetongue outbreaks in the northern part of the country, which has limited the resources for milk powder processing and increased prices. In response, the French government has ordered vaccine shots and planned to initiate vaccination campaigns in Oct-24.

Poland

In Poland, skimmed milk powder prices decreased by 3.16% WoW to USD 2.45/kg in W35, compared to USD 2.53% in W34. The monthly and yearly prices declined by 6.13% and 2.39%, respectively, due to sufficient supply in the country. In the first six months of 2024, Poland’s milk production increased by 4.7% YoY, making the highest growth in the European Union (EU). In addition, China’s investigation of the EU dairy subsidy will likely impact global milk power markets and influence prices in Poland.

3.Actionable Recommendations

Invest in Genetic Livestock Improvements

Belgium's dairy producers should continue expanding their investment in genetic livestock programs to optimize milk production in the face of reduced cattle populations. Producers should collaborate with research institutions to implement the latest genetic advancements, focusing on improving dairy cow efficiency and health. This will ensure a sustainable production increase, which can help Belgium's dairy industry remain competitive in global markets and resilient against fluctuating input costs.

Intensify Bluetongue Virus Mitigation Strategies

Due to the ongoing bluetongue virus outbreaks affecting France's dairy sector, particularly in the northern regions, French dairy farmers should prepare to intensify their biosecurity and disease prevention strategies. Farmers should proactively protect their herds by securing vaccines early and implementing heightened sanitation practices. Coordinated efforts between farmers, veterinarians, and local agricultural authorities will be essential to minimize livestock infections, which have already impacted the milk supply and raised milk powder prices. These measures will protect the health of livestock and help stabilize production costs over time, ensuring the French dairy sector can continue meeting domestic and export demands.

Sources: Tridge, Nieuwe Oogst, Infobae, Agromeat, Agravery, Farmweekly