Tuesday, 03 April 2018 14:55

Global demand for more milk

Written by  Sudesh Kissun
Fonterra chief executive Theo Spierings. Fonterra chief executive Theo Spierings.

The supply and demand of global dairy products is well balanced, claims Fonterra.

However, increased production out of Europe in the coming months may cause some price volatility.

Speaking at the co-op’s half-year result announcement two weeks ago, Fonterra chief executive Theo Spierings noted demand from China, Asia and Latin America was strong.

Imports into China were up 13% over the last 12 months; between October and December 2017, imports were up 16%.

“We are seeing double digit growth in China; a couple of years ago there was a different picture -- only single digit growth,” he says.

Imports into Asia, normally up 2-3%, were up 4% in the last 12 months; Latin America was up 5%.

Spierings says everyone expected South America to become an exporter; but the region still remains a net importer.

“Which only balances out the fact that Russia is still closed (trade embargo) and we don’t see any change anytime soon,” he says.

On the production side, there is only moderate growth: US was up 1% in the last 12 months and NZ only 1%, but milk production dropped sharply between October and December last year.

In Europe, production has lifted in recent months because of high prices but Spierings says milk prices are tumbling.

The current spot price for milk in Europe is 20 Euro cents, versus a normal price of about 40 Euro cents.

He says extra milk out of Europe will end up in the commodities market, impacting the price of milk powders.

 “That’s something we must watch out for,” he says.

A world beater

Fonterra chief executive Theo Spierings says the total payout made to NZ farmers is the highest in the world.

Spierings says when China came into the picture about 2007, NZ assumed a much more prominent role in the global market.

“There was much more demand for NZ products into China,” he says.

“Milk prices in the US and the EU are falling but in NZ prices are rising; that’s positive news.

“The total NZ payout is the highest in the world, which is good for the farmers.”

More like this

Peak milk?

OPINION: So, Fonterra believes New Zealand has reached peak milk.

Peak dairy processing?

Global food company Olam International is setting up a milk processing plant in South Waikato but there are questions about whether New Zealand dairy needs more stainless steel.

National

Same old story!

NZ International Business Forum executive director Stephen Jacobi says the present FTA negotiations with the UK is depressing, with the…

Mayor slams Shaw's SNA claim

Grey District's mayor is unhappy at the lack of response from government ministers about concerns from West Coast leaders and…

Vets may choose Oz over NZ

Border restrictions are putting a roadblock in the way of getting more veterinarians to New Zealand and some are even…

Machinery & Products

One-pass cultivator moves 70% less soil

According to Kverneland distributor, Power Farming, the KultiStrip system will bring opportunities to farm environmentally, while improving yields and profitability.

Claas buys into bots

German harvesting specialist and tractor manufacturer Claas has acquired a minority shareholding in Dutch start-up company AgXeed, the developer of…

» The RNG Weather Report

» Latest Print Issues Online

The Hound

Thanks - not!

OPINION: Your canine crusader reckons one of the few things you can guarantee in farming - a bit like rates…

Careful

OPINION: A mate of the Hound's reckons the PM needs to be a bit careful about who or what she…

» Connect with Rural News

» eNewsletter

Subscribe to our weekly newsletter