Print this page
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

$8 still on the cards

Farmgate milk price forecasts continue to fluctuate despite a rise in the last Global Dairy Trade (GDT) auction.


Labour pains hurt grower

Despite struggling to find workers, fresh produce grower and trader T&G is still forging ahead with growth plans.

China demands, NZ delivers

Meat Industry Association chair John Loughlin says China is one of the most demanding export markets in the world.

Leaving on a jet plane - again!

Damien O'Connor is planning to head back to Europe again shortly to breathe oxygen into the free trade agreements that…

Machinery & Products

Helps tame the wind!

Amazone's recently released WindControl System automatically monitors and adjusts the spreading pattern to compensate for the effect of the wind…

First Claas patent hits a century

While Claas has registered more than 3,000 patents during its 108-year history, the company is currently celebrating the 100th anniversary…

JD invests in robotics

Global giant Deere and Co has acquired Silicon Valley start-up company Bear Flag Robotics, which specialises in autonomous driving technologies…