Global dairy prices are projected to increase from the 2016 low over the coming decade according to the OECD-FAO (Organisation for Economic Cooperation and Development- Food and Agriculture Organisation of the UN) global outlook report. Nonetheless, once inflation is taken into account, it is not thought that prices in real terms will return to the peak levels of 2013.
World milk production is expected to increase 21 per cent between 2016 and 2026. The majority of this increase (77 per cent) is projected to come from the developing nations, particularly India and Pakistan, as herd size and productivity increases. however, most of this is expected to be consumed domestically as fresh dairy products, with consumption of these products growing at 1.8 per cent per annum in developing regions over the decade.
Global demand for processed dairy products is also expected to increase 1.7 per cent per annum overall, supporting commodity prices. In developed regions, consumption growth for cheese and whole milk powder is even expected to outpace the previous decade. However, in developing countries, with the exception of cheese, consumption growth for processed products is expected to be slower than previously. Nonetheless, expanding consumption is still expected to outpace production in the African, Asian and middle-Eastern regions, increasing their import requirements over the decade.
Developed countries provide 82 per cent of dairy exports, with this market share expected to grow slightly by 2026. The EU in particular is expected to benefit, holding 28 per cent of the market by 2026, 4 percentage points more than in 2016. This follows from declining domestic demand for fresh dairy products, while milk production is still projected to grow 0.8 per cent per annum. Increased exports will particularly be supported by cheese shipments. China and Egypt are expected to double their cheese import requirements over the decade, while the EU will also be able to send more to Canada under the CETA (Comprehensive Economic and Trade Agreement), and Russia after the import ban is lifted.
Market round-up
C&D Auction Marts Ltd sold 3067 prime lambs in Longtown on Thursday to a top of £115 per head and 251p per kg to average 196.8p (-0.4p on the week).
Another large show of 5347 cast sheep saw heavy ewes sell to £160 for a Texel and average £81.90 (+84p), while light ewes peaked at £83 for Blackfaces and levelled at £39.67 (-£1.36).
Messrs Craig Wilson Ltd sold 846 prime lambs in Newton Stewart on Thursday to a top of £100 and 216.3p to average 192.6p (+14p).
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