British dairy farmers told milk prices unlikely to recover till second half of 2015

British dairy farmers have been told that in the absence of a significant reduction in available supplies or a return of demand from key importers, the downward trend in milk pricing is likely to continue for the first half of 2015 by British dairy advisor body DairyCo.

Since August, farmgate milk prices in Britain have been subject to numerous cuts as the imbalance between supply and demand in global dairy markets has impacted on the returns available from the market.

DairyCo cites the period of falling wholesale prices, which are currently impacting on farmgate milk prices, is the result of the build-up of excess global dairy stocks.

In an analysis of the current situation in dairy markets DairyCo outlines that milk production in the key exporting countries has increased by just under 8 billion litres in the first nine months of 2014, compared to the same period in 2013.

It says for the Northern Hemisphere, this production situation is unlikely to reverse itself dramatically in the first half of 2015 as the current expansion phase has some months to run.

Cow numbers in the main producing countries (EU and US) are up on previous year figures according to DairyCo, setting the scene for milk production to continue on its current path going into the spring.

It says the reductions in milk prices are likely to start a slowing of production, but only if margins are reduced sufficiently for farmers to look to reduce cow numbers and/or yields through a reduction of supplementary feeding.

DairyCo says in Britain, in spring, with both price reductions and seasonal deductions coming into play, more pressure on farmers to reduce production through the summer and autumn (barring any weather events) will come into play.

It says recent forecasts of Russian import demand for 2015 suggest little improvement on current levels in 2015.

DairyCo highlight the return of the Chinese to the markets is viewed by many dairy analysts as critical to when dairy commodity markets start to stabalise, but when this is likely to happen remains uncertain.

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