A 1.4% increase in world milk output is expected in 2017, according to the Food and Agriculture Organisation (FAO). The same period should also see a 1% growth in global dairy trade levels.
The bulk of this increase will originate in Asia and a number of countries in the Middle East. However, these regions have limited involvement in the global marketplace so this is unlikely to have much bearing on world prices.
Still, production in India is forecast to expand by 3.9%, or 6,300,000t, to 166,600,000t this year.
Production in the US, the third largest global exporter, is set to expand by 2%, compared to only moderate growth expected in the EU. Overall growth in exportable supplies will be somewhat tempered by Oceania.
Production in New Zealand fell during the 2016/2017 season and a lack of reinvestment is expected to constrain production levels during the 2017/2018 season. Overall, supplies from the key exporting regions are expected to grow by approximately 0.6%. This is equivalent to just under 1.6 billion litres.
Trade across the dairy product categories will not follow the same trends, however. While whole milk powder exports are expected to decline, skimmed milk powder, butter and cheese exports all look set to increase.
Skimmed milk powder trade is forecast to recover if the EU diverts production to exports rather than intervention, while butter and cheese trade is projected to show sustained growth on the back of solid demand.