With the Northern Hemisphere being more than three months into its milk year and the Southern Hemisphere heading towards its flush, the strong global supply situation is continuing according to DairyCo.

It says the impact of this strong supply on wholesale markets in 2014 will depend on if this carries on, with one key factor being El Niño, as the probability of this weather event occurring is still high.

DairyCo says that Fonterra reported that this year more of its New Zealand farmers continued to milk into winter, resulting in the co-operative’s NZ milk collections in June being up 10.1% on the same month in 2013. Although milk production growth in Australia in 2013 was limited, it appears to have improved during the country’s trough as a result of more favourable conditions.

In its latest forecast, the USDA estimates US milk production will grow by 2.4% in 2014 compared to 2013, as cow numbers increase. In 2015, milk production in the country is expected to grow by a further 3.2% on 2014.

However, DairyCo note that the growth in EU milk deliveries is expected to slow as 2014 starts to measure up against the strong milk collections in the latter part of 2013, however total 2014 EU milk production is forecast to be 2.8% higher than 2013.