Global dairy markets continue to face mounting pressure as milk production growth accelerates across three influential dairy-producing and exporting regions: the European Union, New Zealand, and the United States. All three regions are reporting year-over-year production increases, reinforcing an already oversupplied global milk market, influencing a bearish market sentiment across the majority of dairy commodities.
New Zealand is in its milk flush season, with November production up 2.4% year-over-year, driven by favorable weather conditions supporting pasture conditions and generally healthy cows, leading to higher milk flows. This has allowed producers to capitalize on peak season production. As a key global exporter, increased volumes have contributed to elevated export volumes.
The European Union is also showing unexpected, continued strength, with October production up 1.3% when compared to last year. A notable development occurred during a time of typical seasonal downtrend in milk production. This has been driven by largely mild weather conditions and profitable farm gate prices. Additional milk has created further challenges for the region as the holiday season limits processing schedules and logistical slowdowns, further adding downward pressure to the liquids market.
Meanwhile, the US is posting aggressive growth as well, with November production surging at 4.7% growth year-over-year, driven by expanding herd sizes across the mid and southwest regions of the country to support new cheese and whey processing capacity. This, coupled with profitable feed prices earlier in the year, has led to additional milk flows throughout the winter season.
With all three global dairy powerhouses reporting elevated milk flows when compared to previous years, export competition has intensified, pushing prices lower in many categories.
Image source: Adobe
Written by Brittany Feyh
