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Milk production in Oceania falls while prices rise

In Oceania limited milk production is sustaining prices in the dairy sector.

In Australia, where the summer is drawing to an close, the availability of milk is still limited.

Milk production dropped in the second half of last year both in Australia (-8.55% in the July-December period compared to the same period in 2015 – data from clal.it) and in New Zealand, the world’s main dairy exporter (less of a decrease with -2.97% in the June-December period of 2016 compared to the same period in 2015).

Decline in milk production and milk powder prices

The limited availability of milk and, consequently, of fat, is reinforcing prices of products with a higher fat content.

As far as whole milk powder is concerned, prices in Oceania are rising due to the limited availability of fat. In the first two months of this year the price of whole milk powder has confirmed the growth trend of the last part of 2016 (an average of 2,585 euros per tonne at the end of October last year rose to an average of 3,098 euros per tonne in mid February this year) with an increase of 65.72% compared to February 2016. Prices, however, are still far from those in Germany, where they increased to as much as 3,193 euros per tonne in January this year (to then drop to 3,096 euros per tonne in February), with an increase of 45.11% compared to January 2016. In Holland, despite prices having increased by 56.90% compared to those of the same month in 2016, there has been a decline (in February a tonne of whole milk powder costs 2,985 euros – data from clal.it)

Skimmed milk powder prices are also increasing after 6 weeks of stability.

Prices for other products

Butter prices in Oceania are rising slightly. New Zealand butter manufacturers are able to obtain higher prices by taking advantage of the limited availability of fat. In Australia more remunerative milk is destined for manufacture into butter and producers are struggling to meet domestic consumption.

Prices are also on the rise for Cheddar. Cheese manufacturers believe that Cheddar is still one of the most profitable dairy products even if demand appears to be relatively stable.