Moving along with global trade

The news that the milk trade forecast has dropped for the first time in nearly two decades should be read as a warning, but not a dire outlook, I suspect. The projected fall of 3.4% seen by the UN’s Food and Agriculture Organization (FAO) Dairy Market Review emerging trends and outlook report, is due mainly to a steep drop in imports from China, with further declines seen for Nigeria, Vietnam and the Russian Federation.

China’s imports are being impacted by a number of domestic issues, not the least being continued lockdowns and lower food service sales. On the upside, China has improved its domestic milk production from 70% to 80%, so this is also seeing an impact on how many milk products it has to import to feed the nation. And stockpiling is a thing – the nation has high powder inventories, so thus, fewer imports needed.

That being said, in Asia, the world’s largest milk-producing region, milk output in 2022 is expected to reach nearly 419 million tonnes, up by 2.1% year-on-year, with much of the output growth anticipated in India, Pakistan, China, Uzbekistan, Kazakhstan and Japan, among others. These gains are forecast to be offset by anticipated output contractions in Türkiye, the Republic of Korea and the Syrian Arab Republic, among others. In India, milk production is forecast at 221 million tonnes, expanding by 2.3%, a slower pace than in previous years, reflecting the outbreak of the Lumpy Skin Disease that significantly affected small-scale operators, the FAO notes.

Overall, world milk production is forecast to grow 0.6% in 2022, to reach 930 million tonnes. This is a result of some declining EU production, with outputs in South America, Oceania and Africa also expected to see drops. North America will remain steady, according to the FAO.

Don’t forget currency depreciation. A lot of the hullaballoo earlier this year in the markets meant that the US dollar held against other currencies, which also meant any imports were more expensive. Nobody cares about the currency until it is time to import machines or feed or anything else necessary to run a production line. Then you want your currency as strong as possible to get the most of every dollar, pound, euro or yuan you can. For more information visit: fao.org/3/cc3418en/cc3418en.pdf.

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