FAO reports reduced dairy prices globally

The FAO of the United Nations has released its latest report on global dairy prices and trends.

Internationally, dairy product prices fell sharply in April 2014, following indications of market weakness in March. Consequently, they have returned to a level similar to early 2013.

The main contributors to the current situation are a strong opening to the milk production season in the Northern Hemisphere and an unusually extended season in New Zealand, which have caused a sudden rise in the availability of products for export.

The FAO Dairy Price Index stood at 251 points in April 2014, 2.8% below the same month in 2013. World milk production in 2014 is forecast to grow by 2.1%, reaching 783 million tonnes, a similar rate to previous years. Asia is expected to account for most of the increase, but production is likely to rise in all regions.

World trade in dairy products is projected to continue rising in 2014, linked to a favourable milk production outlook in most of the major exporting countries and continued strong demand. Trade is forecast to rise by 1.8%, a reduced rate of growth compared to recent years, to reach 69 million tonnes of milk equivalent.

Asia is expected to remain the main centre for rising international demand in 2014, with increased purchases forecast for China, the Islamic Republic of Iran, Indonesia and the Philippines. Elsewhere in Asia, Saudi Arabia, the United Arab Emirates, Japan, Singapore, Malaysia and Thailand remain important markets, but the level of their imports are not expected to change markedly and, in some cases, could decrease.

Reduced international prices may stimulate import demand in Africa as a whole. The principal importers that may buy more are Algeria, South Africa and Ghana. In Europe, imports by the Russian Federation are anticipated to increase, stimulated by strong demand for butter and skimmed milk powder (SMP).