Ornua: Hot weather may impact European milk flows
The recent spells of hot weather across Europe may impact on milk flows in EU member states, according to Ornua.
In its latest market report, the dairy co-op also said the likelihood of a "super" El Nino appears to be increasing, which may constrain milk supply growth, particularly in New Zealand and the southern US.
El Nino is a naturally occurring climate phenomenon that can shape weather patterns across the globe, bringing floods, droughts, heatwaves and storms to different regions.
Ornua
Ornua said that although the growth rate of milk supply appears to have stabilised, "there are no clear signs of a significant slowdown just yet".
"In the absence of a supply or demand shock, it’s unlikely pricing will deviate from current levels in the near-term.
"Weaker supply and seasonal demand should provide some support from September, but the potential for significant price growth in the second half of the year remains limited," the report outlined.
As supply growth is unlikely to slow until the third quarter (Q3) of the year, coupled with the summer holiday season, Ornua said there is a risk of further price easing in July and August.
The report shows that European cheese, butter and skim milk powder (SMP) prices eased compared to the previous month.
Powder futures and spot milk and cream prices are showing"positive signals".
Dairy demand was strong over the first four months of the year, especially for exports. Global milk equivalent exports are up 7% year-to-date.
However, Ornua warned that there may have been some "front-loading" which could affect future demand, while the EU has lost market share to the US.
In addition, consumers and buyers are showing more caution due to impact of the cost of living.
Milk supply
According to the report, global milk collections increased by around 2.5% in May, with growth in most major regions.
Across the 27 EU member states, collections rose by 2.8% in April and are expected to increase by an additional 2.7% in May.
Production in Ireland fell by 3.5% in April, and growth is likely to be limited in May, from a strong base.
In May, collections in Germany were up 6.3%, by 2.6% in the Netherland and 3.8% in Poland.
In France and the UK, collections rose in the first quarter, but the growth rate declined in the second quarter.
In the US, milk supply was up 2.3% in May, with solids continuing to expand.
Milk production is at record highs in New Zealand where there are favourable pasture conditions and strong milk prices.
Output in Australia is ahead of expectations, while production continues to grwo in Argentina.
