Global milk supplies are set to increase in 2011, but strong demand and high feed costs should support commodity prices.

 

The latest forecast by the US Department of Agriculture boosted EU and US milk supplies, said a report by DairyCo. “However, higher input costs remain a major concern; although in the EU costs have so far been countered by improved efficiencies.”

The USDA cut its New Zealand forecast, although production would still increase by 5% compared to 2010. “Exports of dairy products by the five major exporters (Argentina, Australia, EU, New Zealand and the US) are forecast to increase in 2011, with the largest increases for Skimmed Milk Powder (11%) and Whole Milk Powder (4%).”

The US was expected to export almost half of its 890,000t of SMP production in 2011, making it the single largest country exporter and only 36,000t less than the whole of the EU.

This would mean increased competition, but strong Chinese demand and higher feed costs meant the outlook remained largely positive.