A Recap of Dairy Markets Around the World
Alyssa Badger, director of global operations at HighGround Trading Group, recently joined AgriTalk host Chip Flory to share a full download of dairy markets around the world.
Diving into the international supply and demand picture, Badger explained that every country has its own set of issues that factor into the supply side of things and boldly stated that the southern hemisphere milk market is not in good shape.
According to Badger, the wet weather Australia has been getting has impacted their already ongoing feed issues and deteriorated pasture conditions. She says that a return to Australia’s milk production growth is incredibly distant.
“Their close neighbor, New Zealand is also struggling quite a bit, too,” she says.
New Zealand is down 4% in milk output from June to September. Badger shares this is alarming as it should be their spring peak season.
“That is a huge number because it's on top of a negative prior year as well,” Badger shared.
Before the excessing weather, Australia was already experiencing a downturn, according to Badger.
“They’ve been having margin problems for a very, very long time. Milk prices weren't great, just like the rest of the world was seeing really strong milk prices. And they weren't. It's just gotten way too expensive to be a dairy farmer in that country because of how reliant they are on the weather. And it's not like the U.S. where we can just feed as much as we want. They have an image to sell just like New Zealand, that most of their cows are happy feeding on grass and it's just not as possible as it used to use to be,” she said.
Badger told Flory that New Zealand’s dairy future doesn’t look promising for milk production. She shared that New Zealand’s producers are simply frustrated.
“There is a lot of frustration that the dairy farmers are getting targeted. And I completely understand only because they've been spending so much money to be compliant with every little change from the government,” she says.
Factor in increasing input costs and New Zealand dairy producers continue to grow more and more frustrated.
A Different Story in Argentina
The drought that Argentina has experienced has started to bite world conditions.
“There seem to be plenty of milk coming out of the region and farmers were concerned but now we're really starting to see those issues coming into play and seeing some production hiccups being reported out of the region,” Badger says.
Like the rest of the world, Argentina producers are dealing with higher feed costs that have swallowed up the majority of the margins.
European Milk Market
The same tune of high feed prices, unfavorable weather and consumer pressures have negatively impacted the European milk market.
“Margins have been tight in Europe, especially Germany for many years,” Badger says. “And the Black Sea has just exasperated that situation and we've seen just a huge drop in cow numbers and a huge drop in milk production.”
Badger shares that last year’s numbers were bad, too, so they’re starting to see some year-over-year growth in that region. She says while it's growth, it’s over a very negative prior year, so it’s important to keep that in perspective.
While growth mode has returned to the U.S. and is likely to continue for the next several months, Badger says it is likely to moderate in the next six months.
By KAREN BOHNERT
November 9, 2022