Year of publication 2019

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Place of publication Rome, Italy ;

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Pages 11p.

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Author FAO

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Publisher FAO ;

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Product type Journal, magazine, bulletin

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Edition 1

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Synopsis (short abstract) Global milk output in 2018 is estimated at 842 million tonnes, an increase of 2.2 percent from 2017, driven by production expansions in India, Turkey, the EU, Pakistan, the United States and Argentina, but partially offset by declines in China and Ukraine, among few others. This increase has come about as a result of higher dairy herd numbers along with improvements to milk collection processes (India and Pakistan), efficiency improvements in integrated dairy production systems (Turkey), increased yield per cow (the EU and the United States) and enhanced utilization of idle capacity and higher demand from the processing sector and imports (Argentina). Milk output declines largely stemmed from industrial restructuring processes and downscaling of small-scale farms (China) and reduced producer margins and farm gate prices (Ukraine). Across the regions, Asia registered the highest milk output expansion by volume in 2018, followed Europe, North America. Milk output expanded in all other regions too, but by smaller volumes. World exports of dairy products expanded to 75 million tonnes (in milk equivalents), an increase of 2.1 million tonnes, or 2.9 percent from 2017, principally coming from the United States and Argentina, but also India, Uruguay, and Mexico. By contrast, exports declined in a number of countries, in particular in the Islamic Republic of Iran. Across the main dairy products, in 2018, SMP registered the highest export expansion (+8.6 percent), followed by butter (+7.5 percent), WMP (+1.7 percent) and cheese (+0.8 percent). As for milk powders, consisting of SMP and WMP, export availabilities were abundant from almost all major international suppliers. Large stocks of SMP, held by the EU, the United States and India, also contributed to elevate global supply availabilities. EU SMP stocks, given their age, were mostly considered less suitable for human consumption. In addition to immediate human consumption in the form of milk, powders were also in high demand from food processors and manufacturers, boosting import demand from some countries such as Mexico. Although butter exports for the whole year expanded, supplies were relatively limited in the first six months. Global supplies rose only when supplies from Oceania began entering the global markets, starting from about July, when its milk production season was in full swing. Butter import demand nevertheless was robust, especially from Asia, as urbanization, rising income and changing food habits made butter demand less price sensitive. Cheese exports expanded at a slower pace in 2018, compared to that of 2017, reflecting import cutbacks of many importers, including Australia and the United States. A robust market, however, existed for high value cheese products, boosted by rising consumer demand for specialized cheese varieties, also with geographic labelling. International dairy prices in 2018, measured by the FAO Dairy Price Index, declined by 4.6 percent compared to that of 2017, reflecting declines in prices of all dairy products represented in the Index, with the highest fall registered for SMP (-5.6 percent), followed by cheese (-5.2 percent), butter (- 4.4 percent) and WMP (-2.9 percent). The global supply-demand balances of each commodity, induced by factors discussed above, are compatible with these price movements. An additional factor that is noteworthy of mentioning on international dairy prices was the significant differentials that existed between the EU and Oceania on butter, WMP and SMP prices. Prices for butter and WMP in the EU hovered at higher levels than for Oceania, and that prices of SMP from Oceania were higher than those from the EU. Market segmentation, associated consumer preferences, reflecting geographical proximity to markets, was thought to be behind the observed price differentials across the two regions.

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Language English

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