As drought conditions continue to recede in New Zealand and many areas throughout Europe, milk supplies are beginning to expand in major milk exporting countries. However, as that growth takes place, strong demand both in the U.S. and abroad has been quickly absorbing the extra milk.
Stateside, August milk flow expanded 2.6 percent in all 50 states which was the largest monthly gain this year. Only Idaho and New Mexico slowed milk output among the leading 23 dairy states. Of note, California posted its first gain in over a year at 2.7 percent over its previous August production.
While milk production has expanded 1.8 from June to August, USDA's latest estimate for 2013 production projected only a 0.7 percent growth rate for the entire year, partly due to slow production growth from January to May. Its projection for 2014 was 1.3 percent as the nation continues to recover from the devastating 2012 drought.
Slight growth in milk supplies is also taking place in Europe after 12 consecutive months of contraction, reported Kevin Bellamy and Matt Johnson, who are Rabobank dairy analysts in Europe. The duo reported July's milk production was up 2 percent and the primary driver was the weather as growing conditions continue to improve. Rabobank forecasts milk production will grow 3 percent in the second half of 2013 on the European continent.
In New Zealand, milk output fell 1.5 percent for the 2012 to 2013 season which ended in May (fall for the southern hemisphere). Moving forward, the New Zealand government projected milk flow will be up 4.5 percent for this year while Rabobank's Hayley Moynihan pegged a higher estimate of 6 percent.
Collectively, it appears that milk production needle is moving upward in all three major dairy export milk markets. However, as long as economies continue to recover from the recent recession, it appears strong dairy product demand will continue to absorb extra milk flow.
September 30, 2017
