Q4 milk production growth slowed according to report
A report by Rabobank showed that third quarter 2018 milk production growth sank to just 0.8% year-on-year, and predicts a similar rate for the fourth quarter.
Lingering effects from the year’s weather on feed quantity, quality and cost has severely impacted Australian milk flows and stalled European growth. The US looks set to see the lowest year-on-year growth since 2013.
Yet some areas have seen more positive results. As a result of more moderate feed costs and profitable milk prices, Brazilian production is expected to close in quarter four with growth of 3% year-on-year, up from 1% in quarter three. Argentine producers have overcome inflated milk production costs and continue to make a recovery from the low volumes delivered over the prior two years. But the star performer remains New Zealand, setting a new record for peak milk flows in the month of October. Still, estimated flows for the Big 7 during quarter four 2018 are for just 0.6% year-on-year– the lowest since 2016.
According to Emma Higgins, Dairy Analyst with RaboResearch F&A: “A challenging environment for expansion lies ahead. Herd numbers continue to shrink in Australia, Europe, and the US, either to mitigate escalating costs and/or overcome disappointing farmgate milk prices – features that will continue into the first half of 2019. Australia faces a slow recovery, with industry confidence severely knocked, while consolidation of farm numbers in the US and Argentina is also set to continue.
“The EU is finding its footing post-quota removal and drought impact, which may provide opportunity for some regions, but challenges for others – particularly farmers in the Netherlands navigating farm phosphate references. New Zealand dairy is facing stronger competition for other land uses, and resource constraints will provide barriers to growth across to 2020.”