For the first time in more than a year, the top five dairy exporting countries produced less combined milk than they did 12 months ago. The most notable shift comes from the EU.
May milk production data suggests the long-awaited supply response to low dairy commodity prices may finally have some teeth, even if it's just baby teeth.
For the first time in more than a year, the combined total of the top five dairy exporters in the world—Argentina, Australia, the European Union (EU), New Zealand and the United States—shows less milk produced compared to the same month the previous year.
To get the details, go to the right side of the first interactive chart below. Each of the top five producers is color coded. New Zealand, for example, is blue. Click a country's color to see its milk production data compared to the previous year.
Editor's note: The chart works best on a PC and may not render properly on a mobile device. Also, the numbers in this chart change automatically as new data comes in. EU milk production numbers may change as individual countries report new totals. You can always access the latest production chart on usdec.org here. The analysis on this page is based on available data on July 20.
The shortfall was not huge—only 58,000 tons—but it was notable for the shift in the EU, the biggest contributor to the global oversupply, responsible for more than 90 percent of the “new” milk produced by the five major dairy traders from April 2015-April 2016.
USDEC estimates EU milk deliveries were up just slightly during the heart of the spring flush compared to the previous year—a significant shift from the monthly 543,000-ton gains EU dairy farmers averaged from the lifting of quotas in April 2015 through April 2016.
EU producers—particularly those in Denmark, Ireland and the Netherlands—are still not pulling back to the same degree as their Southern Hemisphere counterparts. Australian milk production failed to match previous year results for eight straight months through May, Argentine production was on a six-month streak of declines, and New Zealand production, while up in May, declined in eight of the previous nine months.
The European Commission expects to end the calendar year with milk deliveries up by “above 2 million tons.” Given that deliveries are already 2.8 million tons higher through the first five months, we can expect flat to declining output (compared to the previous year) for the remainder of 2016.
Moves made this week by the European Commission could further erode those numbers. As part of a new dairy assistance package, the Commission announced a voluntary bloc-wide plan that would pay farmers for reducing milk output.
Simultaneously, loss-making farmgate milk price estimates in Australia and New Zealand remain on a knife’s edge of falling further, casting doubts about the strength of the Southern Hemisphere flush coming up in the Fall.
Year-on-year U.S. milk production has risen for 29 consecutive months. With income over feed costs dropping to the lowest level since 2013, will U.S. production trends join the rest of the world?
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EU producers—particularly those in Denmark, Ireland and the Netherlands—are still not pulling back to the same degree as their Southern Hemisphere counterparts. Australian milk production failed to match previous year results for eight straight months through May, Argentine production was on a six-month streak of declines, and New Zealand production, while up in May, declined in eight of the previous nine months.