Milk purchases down on 2016

Milk purchases in March 2017 were 0,6% lower than in March 2016. This follows on a 4,4% decrease in February 2017 compared to February 2016 or a marginal decrease if prices are adjusted for the 2016 leap year. Total milk intake from January to March 2017 was 726 million litres – 0,5% down on 2016. While a more favourable milk: feed price ratio offers some relief to farmers after the cost squeeze of the previous year, various factors are limiting production growth in 2017. Severe drought in the Southern, Eastern and Western Cape, outbreaks of disease in many areas and the limiting effect of the 2016 drought on production and fertility will hamper production growth this year.

Grain prices on the SA Futures Exchange for delivery in 2017 are currently low and milk producers should take this into consideration in planning future grain purchases. Future price increases are likely.