Algeria to play vital role in supporting dairy markets

Algeria is one of the world’s key destinations for exports of milk powders and it may play an important role in supporting dairy commodity prices according to experts at DairyCo.

It says demand from Algeria has accounted for around 17% of all global trade in milk powder over the past five years. It also highlights that this year total volumes for the first eight months of 2014 have already exceeded the total volume for the whole of 2013.

According to DairyCo this suggests that the Algerian government dairy buying agency, ONIL, has taken advantage of falling global commodity prices to build stock levels. As a result, ONIL has stated that it has sufficient volumes to meet domestic needs until July 2015.

DairyCo says if this surge in purchasing by Algeria is simply a change in the timing of purchasing rather than a sustained increase in demand limits, any support the surge in buying may offer to declining commodity prices will be limited.

It notes that it is significant to note that one of the world’s biggest buyers of milk powder has storage capacity to satisfy domestic demand for almost 12 months ahead, providing Algeria with the ability to take advantage of pricing cycles.

According to DairyCo, when global powder prices appear to be on the verge of bottoming out we may see another spike in demand from Algeria as it seeks to fill stores with powders at the lowest possible price.

It says a move such as this could provide a floor to milk powder prices.

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