Weekly Product Updates

W42: Dairy Update

Dairy
Cow Milk
Morocco
Netherlands
Market & Price Trends
Published Oct 26, 2023
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In W42 in the dairy landscape, in the latest trading session on October 17, the Global Dairy Trade (GDT) price index increased to 994, its fourth consecutive rise and a substantial 4.3% surge compared to the prior event on October 3. This upward trend started in early Sep-23, although it is still at levels last observed in late 2020. The lowest point for the index in 2023 was noted on August 15, when it dropped to 850. During the GDT auction, 35,974 metric tons (mt) of dairy products were sold, with 117 winning bidders out of 167 participants, spanning 18 bidding rounds. The average price for this event settled at USD 3,202/mt.

All products offered experienced an increase in their average prices, except for buttermilk powder (BMP), which was not available at the GDT auction. Anhydrous milk fat saw the most significant gain, rising by 7.1% to USD 5,310/mt, following a 3.7% increase at the previous auction. Skim milk powder (SMP) also experienced a substantial price growth of 4.3% to USD 2,659/mt. Whole milk powder (WMP) saw a robust rise of 4.2% to USD 3,059/mt. Butter prices grew by 2.9% to USD 4,940/mt, with cheddar and lactose showing marginal gains of 0.2% to reach USD 3,858/mt and USD 599/mt, respectively.

The CRV cooperative indicates that milk production from dairy farms in the Netherlands averaged a lifetime yield of 38,327 kilograms (kg) in the 2022/23 season. This represents a remarkable growth of 926 kg compared to 2021/22. This milk production translated to 3,048 kg of fat (4.38%) and protein (3.57%) over the period. The lifespan of pedigree cows grew by over three weeks to 2,255 days. The number of cows with lifetime productions exceeding 100 thousand kg of milk rose significantly, with 4,707 cows surpassing this threshold, a significant increase from 2021/22. Moreover, cows with lifetime productions exceeding 10 thousand kg of fat and protein also increased from 297 to 406. These improvements were partly due to a 22-day longer lifespan and a slightly longer productive lifespan in 2022/23 than in 2021/22, driven by a four-day reduction in the rearing period.

The average milk production per milking day for Dutch cows was 29.4 kg in the 2022/23 season, a slight increase from the 29.3 kg in 2021/22. Additionally, the calving interval remained steady at 408 days. The average milk production per lactation increased by 260 kg to 9,346 kg of milk with 4.45% fat and 3.61% protein. This resulted in 753 kg of fat (+0.07% YoY) and protein (+0.06% YoY) and an annual economic profit of USD 2,290.93.

Lastly, Morocco is grappling with a severe milk production crisis, leading to a potential price surge in the coming weeks. The country has witnessed a significant 60% decrease in milk production in 2023, primarily due to persistent drought conditions, leading to reduced feed production and subsequently impacting milk yields. Escalating feed prices has exacerbated production costs, disproportionately affecting the majority of Moroccan farmers, who are small-scale producers. Their struggles are further amplified by limited government support. This crisis translated into significantly elevated milk prices, straining consumer purchasing power and causing critical supply shortages. The precarious situation now threatens food security in Morocco, given milk's essential role in the country’s national diet. Proposed solutions include irrigation projects to combat drought, support for small farmers, increased imports, and assistance to cooperatives in importing powdered milk. The government has suspended customs duties and taxes on powdered milk imports, reduced customs duties on slaughter-bound cows to protect dairy herds, and redirected national production to ease shortages.

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