IFCN predicts new milk price cycle starting in 2018
The International Farm Comparison Network (IFCN) is expecting a new dairy price cycle to start in 2018, beginning with a downward dip. At its 15th annual Supporter Conference, 19-21 September in Lucerne, Switzerland, the IFCN presented data and outlooks for the future dairy markets and milk price development.
Since 2006, five world milk price cycles could be identified and IFCN expects a new cycle beginning early 2018. This new cycle is estimated to start with a downward trend first, unless a strong increase in milk demand occurs.
The conference gathered over 100 experts from 80 international dairy businesses. Core messages were that the dairy world will be driven by price cycles with different length and price amplitude.
Łukasz Wyrzykowski, data analyst at IFCN, explains, “The key driver for dairy price cycles is the delay of national milk supply reaction on world market price trends. Overalls it takes three to 12 months from a price signal on the world market to a change in milk supply growth.”
The IFCN presentations at the conference showed that solid and constant information is a key resource to navigate in such a diverse dairy world and drawing conclusion for a thoughtful future planning.
One of the participants states, “Accurate and continuous real time data, especially on production and the milk prices in the main milk countries is essential for our operational day to day business.”
Dairy experts identified natural, market and political factors as main drivers in the past. In the future, new technology and social issues – especially the consumer acceptance – are seen to play a bigger and bigger role.
The leadership on this important task could be taken best – so the outcome of an electronic poll among the participants – by milk processors. These companies could be ideal stakeholder to drive dairy forward and might be the biggest influencer when it comes to making a dairy region successful.
Torsten Hemme, managing director of the IFCN, adds, ‘We are living in a complex and fast changing dairy world. The milk price will remain volatile, but is not a fully unknown factor.
“We in IFCN have reviewed its cycles since 1996 and learned from the past. All cycles are following patterns, so does the milk price and with it the delay in supply response. So be ready for the next cycle with its ups and downs.”