Dairy market review from UN FAO

The United Nations Food and Agriculture Organization has released its annual dairy market review for 2022. In it, the FAO says, “World milk production in 2022 is forecast at around 930 million tonnes, up by 0.6% from 2021, principally driven by volume expansions in Asia with a small gain in Central America and the Caribbean, offset by a sizable decline expected in Europe. Outputs in South America, Oceania and Africa are also expected to fall moderately, while production may remain steady in North America.

“As for global demand, import purchases by China, the world’s largest dairy importer, fell steeply starting from April, especially for whey products and milk powders due to high inventories, lower food services sales, impacted by Covid-19 lockdowns and rising domestic milk production. Imports also fell in several countries due to economic downturns, high dairy prices, currency depreciations against the US dollar and limited foreign exchange, further weighing on international dairy prices.

“In addition, lower demand for spot supplies and medium-term contracts during the summer months in the Northern Hemisphere due to long holidays as well as expectations for dairy supplies to increase in the unfolding 2022/23 season in Oceania, further weighed on global dairy prices. However, the decline in international dairy prices was contained to some extent by increased import demand by leading importers in the Middle East and East Asia, together with tight supplies from leading producers, especially the European Union and Oceania.”

In global trade, milk products trade was forecast at 85 million tonnes (in milk equivalents), down by 3.4% from 2021, the first decline in nearly two decades, primarily underpinned by a steep drop in imports into China, with further declines forecast for Nigeria, Vietnam and the Russian Federation.

Despite the expected export contraction, global trade in butter is forecast to rise by 6.2% from 2021, while cheese exports may increase by a small margin. By contrast, global trade in whole milk powder (WMP), skim milk powder (SMP) and whey powder, the most traded dairy commodities, is forecast to drop, respectively, by 6.4%, 3.5% and 5.6%, principally underpinned by possible declines in purchases by China.

For more information visit: fao.org/3/cc3418en/cc3418en.pdf.

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