Ornua Report Reveals Improved Supply Outlook, But Market Caution Remains.
Global milk collections saw a modest but significant increase of 1.7% in May, primarily propelled by robust growth in the United States and Europe, according to the latest Ornua Global Dairy Market Report. While the overall outlook for global milk supply has shown improvement, Ornua’s analysis suggests that these increased flows are “unlikely to be a major burden” on the market. This indicates a balanced growth that might not lead to significant oversupply, a crucial insight for dairy economics.
Within Europe, milk flows demonstrated a positive trajectory, growing by 1.2% in April and an additional 0.3% in May, with notable contributions from France, Poland, and Ireland. Ireland, in particular, saw sharp increases in March and April, followed by a substantial 6.8% rise in May, albeit from a lower baseline. While the annual forecast for the 27 EU member states has been revised upwards, the report emphasizes that growth expectations remain modest and could be influenced by external factors such as weather patterns or animal health challenges. The UK dairy sector also exhibited strong performance, with output lifting by 6.5% in April and 5.8% in May.
Across the Atlantic, US milk collections expanded by 1.6% in May, marking the fifth consecutive month of growth. Ornua highlights that this supply strength is particularly evident when adjusted for milk solids. This sustained increase in US dairy production is attributed to both improved yield per cow and higher cow numbers, with projections indicating continued expansion in output. This robust North American dairy production plays a significant role in the global supply landscape.
In the Southern Hemisphere, New Zealand’s milk flows registered an impressive 8.3% increase in May, albeit against a low base, as the peak milking season has now passed. Despite this monthly surge, annual collections in New Zealand are expected to align closely with 2024 figures. Conversely, milk supplies continue to contract in China, although the Ornua report notes nascent signs of stabilization in the crucial Asian market. Overall, Ornua forecasts a 1% expansion in annual global output, largely driven by the growth observed in the US dairy industry.
From a market perspective, Ornua’s report indicates increased activity throughout the second quarter, accompanied by generally positive sentiment. While buyer engagement remains strong, a recent easing of interest is noted, which is deemed “not unusual during the summer months.” Most European and New Zealand dairy prices have seen a slight decrease compared to the previous month. However, a key observation is that most European commodities now command a “significant premium,” although Ornua cautions that an “uncertain global trade environment” could potentially dampen demand later in the year, urging dairy analysts and exporters to remain vigilant.
Source: Agriland: Ornua: Global milk collections increased by 1.7% in May
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