According to a number of dairy analysts, milk production in Southeast Asia has come under threat as it struggles with outbreaks of foot-and-mouth (FMD) disease.
A 20 per cent drop in China’s milk production is reported to have taken place in part due to FMD. This, combined with high feed prices and high beef prices, is believed to have led to the slaughtering of around two million cows.
Despite official claims that the disease is under control, it is thought that some regions of India are experiencing reduced milk production.
Korea is still recovering from an outbreak of FMD in 2008, after it was forced to slaughter eight per cent of its dairy herd.
The decline in domestic production for these countries is thought to be helping to support the stability in world dairy wholesale prices, which have remained elevated despite increased milk supplies from the key global producers.
Meanwhile farmgate milk prices across Europe continue to strengthen on the back of Asia’s animal health problems.
The October EU27 weighted average milk price stood at €39.52/100kg, up €1.08/100kg (2.8 per cent) on the previous month. Compared with the previous year, the weighted average EU27 price for October was up €6.35/100kg (19.2 per cent).
The October EU28 weighted average price, including Croatia, which joined the European Union on 1 July 2013, stood at €39.52/100kg, up €1.08/100kg (2.8 per cent) on the previous month. Significantly, the average UK farmgate price in October stood at €38.41/100kg, which was the twelfth highest price of any nation in the EU15 after Finland, Ireland, Greece, Sweden, Netherlands, Germany, Italy, Denmark, Belgium, Austria and Luxembourg.
The EU15 weighted average price stood at €40.28/100kg in October, €1.01/100kg (2.6 per cent) up on September and €6.48/100kg higher than the October 2012 average. Looking at the top-five milk producing countries (Germany, France, UK, Netherlands and Poland), the average October price was €38.63/100kg which was a €0.79/100kg (2.1 per cent) increase compared with the previous month.
Prior to Christmas a number of leading CEOs with the Irish dairy sector expressed great optimism regarding the prospects for the sector. Most believe that local milk prices should hold up well into the New Year. New Zealand mil output has now passed its peak. The key imponderable moving forward will be the scale of Europe’s spring milk flush and the impact this will have on market returns.