Dairy market volatility to continue

July 2, 2013

Global weather, supply issues in the feed markets, and strong demand from developing countries will all combine to keep dairy prices volatile for the near future, according to speakers at INTL FCStone’s Dairy Outlook Conference, held in Chicago, Ill., June 20–21.

Experts from around the world offered their views on macro-economic issues affecting the dairy markets as well as the impact of global supply and demand. Presentations covered the influence of markets like Ireland, New Zealand, and India on the production and consumption of dairy products around the globe and the changing tastes of consumers and how they are shaping the dairy industry.

“We’re seeing milk production increase in the United States with fewer cows and we’re estimating total U.S. production reaching nearly 201 billion lbs in 2013,” said Robert Chesler, Vice President of FCStone LLC’s Food Division. “Through April of this year, the majority of our exports were bound for Mexico followed by Southeast Asia. Oceania has increased their imports of U.S. dairy products 43% over last year.”

Chesler projects world milk production to increase by 170 metric tons in 2022 vs. current. “The majority of that milk production (70%) should come from developing countries such as India. But keep in mind that water remains the greatest threat to growing dairy production and those developing countries need to solve some of their infrastructure issues before realizing those gains. This forecast calls for a growth rate of 1.8% per annum, well below the 2.3% growth rate of the previous decade resulting in higher prices. Consumption will increase at an average of 2.1% per annum based on robust international income growth, population growth and further westernization of diets,” said Chesler.

Press release