International milk price recovery possible in 2016

A recovery in international milk prices during 2016 is possible, although the exact timing still remains uncertain. This was the consensus of the 69 dairy experts from 41 countries who recently attended the 17th International Farm Comparison Network (IFCN) Conference in Ghent, Belgium. According to MPO economist Dr Koos Coetzee, who attended the conference as part of the Milk SA Industry Information project, lower milk production resulting from lower producer prices has already led to a slowdown in milk production growth. Production in Southern Hemisphere countries is growing at negative rates. Continued high production growth in the European Union and the high level of both intervention and other stocks are the main factors limiting price increases.

IFCN analysis estimates milk production growth in 2016 at 1,5%, down from 1,8% in 2015 and 3,2% in 2014.  According to Dr Torsten Hemme, founder of the IFCN dairy network, price recovery will depend largely on the actions of the current dairy stock holders.  If they do not release stocks, a recovery before year-end is very likely. However, if stocks are liquidated sooner, the recovery may be postponed until 2017. Click HERE to read the IFCN press release.

(Dr Coetzee’s attendance at the conference was sponsored by Milk SA as part of Milk SA’s industry information project.)