New Zealand’s milk output could fall by up to 10% over the coming months, according to Rabobank dairy analyst Kevin Bellamy.
Speaking at this year’s Agricultural Science Association conference in Kilkenny recently, the dairy analyst said that this effect will not kick in until after Christmas.
“This prediction is based very much on my own assessments. I know that Fonterra is projecting a significantly smaller downturn in Kiwi milk output.
“The key determinant will be the amount of supplementary feeding offered by dairy farmers in New Zealand to their cows at the back end of the current grazing season,” he said.
Furthermore, Bellamy added that this market will be also influenced by the ‘tenor’ of international markets in the new year.
The Rabobank analyst confirmed that China has 200,000t of milk powders in store at the present time.
“These will run down over a period of time, after which China will re-enter the international market place.
“Indigenous milk output levels in China must also be taken into consideration. As world milk prices fall, the greater the likelihood that Chinese dairy production levels will start to drop away,” he said.
Bellamy believes that China will not be the dominant force on word dairy markets as was being predicted a number of months ago.
“And that may not be a bad thing,” he said.
Where Irish dairy is concerned the real driver for the future will be the fact that the industry’s production costs are the lowest in the world.
“This is due, in part, to the current weakness of the Euro against the US dollar. All of this should mean that when the world’s dairy markets do start to rebound, Ireland will be the first country to feel the benefit of this change in sentiment.
“But, irrespective of what happens on global markets over the coming months, the challenge of volatility is here to stay. And the Irish dairy sector must come up with a sustainable way of dealing with it.”