MARKET FORCES, weather and some EU subsidies are finally reducing milk supply — to the point of raising dairy prices.
A Rabobank report says European farmers are finally cutting milk production after their subsidies change from supplying milk to cutting their production over the next six months (European farmers certainly know how to milk the subsidy teat!)
Heavy wet weather in Australia, plus farmers worldwide cutting back in dairy have led to tightening world supplies. Except in India where dairy keeps growing, with milk demand up domestically, leading to growing export of dairy meat to third world countries.
December milk powder futures in New Zealand (the world’s biggest exporter) have lifted 10 per cent in the last fortnight to $US3050/tonne. That’s led to some small increases by major Australian milk producers, Murray Goulburn and Burra.
Australia’s milk production fell 9.2 per cent in August after a 10.2 percent fall in July. The floods in Victoria and Tasmania last month have cruelled the usual spring flush milk increase.
European dairy production fell 1.9 percent in August, the first fall since 2013.
“The milk correction is supply driven and is expected to continue well into 2017,” Rabobank said.