LYUDMYLA KRYVOKHAT’KO, Deputy Director Infagro, Analyst: How the prospects of the global dairy market look like at the beginning of the year

Although after a fairly long lull in the world dairy market some recovery can be observed, it is still too early to talk about fundamental changes.

In Oceania, where production is still seasonally active now, prices have strengthened. But this happened not because of improvement of the market situation, but because of the expected worse results of the season and the ongoing negative weather conditions. This situation has already partly affected the European market. After all, if the negative trend in Oceania continues, Europe will be capable to overcome the shortage of milk. The incresing milk production in the EU will soon begin to increase also due to the seasonal factor. In particular, according to the results of eleven months 143.2 million tons of milk was sent for processing in the EU, 1.5% more than in the same period of 2016. For comparison: the figure for ten months was 0.8%, and for nine 0.4% higher.

Do not forget about the large amounts of interventional milk powder. Although, in order to avoid such a problem in the long run, the European Commission has already changed the rules of “intervention” in the market, but processors still care about drying of milk protein, which may affect the redistribution of raw milk flows.

In this case at risk are cheese market, which until recently was characterized by relatively favorable conditions for sellers, SMP market (though to a lesser extent), and the market of butter (deficit, although, last year’s scenario is unlikely to happen). Do not forget also about the role of the United States on the global dairy markets. The largest exporter of SMP (first among the world’s countries and second after the EU) now also has large stocks of goods. Moreover, production of milk in this region is increasing and this trend will continue.

So, this year seems to be not that easy for the operators of the dairy market. The uncertainty of global trends still does not allow us to look at the prospects of the market with optimism.

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