Global milk output lower but prices up
Austria saw raw milk prices improve at the end of 2020. Agrarmarkt Austria (AMA) estimated the average raw milk price for December 2020 at €0.403/kg (average of all qualities and ingredients), while the Austrian dairies and alpine dairies in November paid milk suppliers an average of €0.4007/kg of raw milk. Austrian dairies bought 235,971 tons of raw milk from their suppliers in November. The total milk delivery is around 1.8% below that of the same month in 2019.
Company-specific programmes and calls from processors to reduce milk deliveries continue to have an effect. However, the situation on the milk market remains tense. The tightened measures and what is now the third lockdown in Austria due to the coronavirus are affecting consumer behaviour, albeit not as strongly as during the first lockdown in spring 2020.
Meanwhile, Rabobank analysts are cautiously optimistic in the current milk market forecast, because prospects for milk prices in 2021 are better than expected at the beginning of the pandemic.
After a very strong global milk production growth in 2020, Rabobank assumes that milk production will slow down significantly in 2021. The global growth in milk volume is estimated by Rabobank to be around 2.7 billion litres in 2021, which is far below the increase in milk production from 2020.
Rabobank points out that for the largest global milk exporters – EU, New Zealand, USA, Australia, Belarus, Argentina and Uruguay – the growth in milk production in 2020 was surprisingly high. In 2021, the EU and South America are projected to see the largest slowdowns in milk growth, while production in Oceania and Australia will remain unchanged.
Further positive reasons for the good prospects on the milk market are the rising raw material prices (especially crude oil) and it is also assumed that the demand of some large milk importers will increase. In addition, expected recovery in economic growth is also having a positive effect in many regions.