In the opinion of Credit Agricole analysts, prices on the global milk market will continue to decline until Q3 2024. They expect that at the turn of Q3 and Q4 this year. the trend will be reversed and prices will increase, which will be supported by the revival of demand for dairy products, supported by, among others, by stronger demand in Europe.
The coming months will bring a decline in milk purchase prices, as analysts from Credit Agricole point out in the latest AGROmapa.
Price correction on the global milk market
As analysts point out, the fourth quarter of last year brought an increase in the prices of dairy products. This occurred despite still weak global demand and resulted from a decline in milk supplies among the main exporters of dairy products.
The price increase had a wide range of products, with the highest increase in the prices of butter (by approx. 24%) and whey (by approx. 23%). As a result, the ratio of milk fat and protein prices increased again, reflected in the difference between the prices of butter and skimmed milk powder, according to the authors of the agromap.
“In recent months, we have been dealing with a correction and a renewed decline in prices. In our opinion, this is due to the improving prospects for milk production among the world’s largest exporters of dairy products, combined with continued weak global demand,” the analysts emphasize.
Good prospects for milk production in the northern hemisphere
The authors of the report note that currently the market’s attention will increasingly focus on the Northern Hemisphere, where the EU and the USA will be entering the decisive phase of the milk season.
“So far, agrometeorological conditions in the EU and the USA remain good. At the same time, the still relatively high profitability of milk production, resulting from high milk purchase prices in the conditions of low feed prices, is, in our opinion, an impulse to increase its supplies. The main risk factor for such a scenario is the possible deterioration of agrometeorological conditions in the coming months,” analysts say.
Global demand for dairy products remains weak
The creators of agromap point out that global demand for dairy products remains weak. According to them, the volume of foreign sales of the world’s largest exporters of dairy products (EU, Great Britain, New Zealand, USA, Australia and Argentina) expressed in milk equivalent increased by 1.8% in the period from January to November 2023. y/y. The main source of the slowdown in global demand for dairy products are smaller purchases from China, the volume of which expressed in milk equivalent decreased by 7.0% in the period from January to November 2023. y/y.
“The reason for lower purchases from China is the slowdown in domestic demand in this country, as well as the growing internal milk production, which has increased by over 30% in the last 5 years.” – indicate analysts.
Prices of dairy products will remain on a downward trend
Analysts from Credit Agricole also indicate that the expected increase in milk production in the EU and the USA in the conditions of weak demand for dairy products will contribute to a decline in prices on the global milk market in the coming months.
“We believe that they will continue in a downward trend until Q3 2024. We expect that at the turn of Q3 and Q4 this year. the trend will be reversed and prices will increase, which will be supported by the revival of demand for dairy products, supported by, among others, due to stronger demand in Europe,” say the creators of agromap.
The coming months will bring a decline in milk purchase prices
The authors of the analysis expect that the milk purchase price in Poland will continue to decline in the coming months. Locally, high competition for raw materials between dairies will remain a factor limiting the scale of price decline.
Forecast of milk purchase prices at the end of 2024 and 2025.
Compared to the previous winter forecast, milk purchase prices in Poland estimated at the end of 2024 increased by PLN 10/hl.
“We forecast that at the end of 2024, the milk purchase price in Poland will be approximately PLN 210/hl, and at the end of 2025, approximately PLN 240/hl,” say economists from Crédit Agricole.
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