Global Dairy Markets balance sheet

Global supply
AU: Milk production is growing moderately despite good seasonal conditions. Milk production for the season is below the 5-year average by 1.7 per cent. Supply is expected to remain relatively flat in the 2021/22 season, with Dairy Australia forecasting growth of only two per cent.
EU: 4.6% of total EU raw milk collected in May 2021 was organic milk (based on notifications from 21MS); the highest share in AT (20%) & lowest in PL (0.3%) (based on notifications from 21 MS).
NZ: The New Zealand milk production forecast for this year is revised up to 22.4 million tons – an increase of 1% over the record-setting level in 2020. However, falling prices at the GDT are putting pressure on milk price forecasts.
US: According to USDA data, the US cattle number are highest since 1994, when the U.S. dairy herd population was tallied at 9.507 head. It dropped to 9.481 head in 1995 and was recorded as low as 9.050 million head in 2005. Milk cow numbers have increased every month since July 2020. They climbed 5,000 head from April to May alone, and in the first half of 2021, the nation’s herd has grown by 144,000 head. For comparison’s sake, that’s roughly the size of the current milk-cow population of South Dakota. USDA predicts the upward trend in milk-cow numbers will continue into next year, with a projected 2022 national herd size of 9.515 million head.
On average, 500 farms have been closing their doors every year for the past 15 years, whether it be from a lack of generational workers or a decrease in how many glasses of milk you drink.

Global Demand
CN: Chinese whey powder imports for January – June 2021, 396,387 MT, increased 44.7% from January – June 2020, according to Trade Data Monitor and Eucolait. Shipments from the EU27 make up 38%, and shipments from Belarus make up 10% of the total whey imports.
The New Zealand exports reached a new high in June 2021 as China continues to receive the largest share of New Zealand exports. In June 2021, China received 32% of New Zealand’s total exports. China received 44% of New Zealand’s dairy, 90% logs, and 41% meat.
Mid-east: Inefficient rainfall is anticipated to impact most of the mid-eastern countries, including Algeria. Wet weather in the 2021-22 marketing year was below average, decreasing soil moisture and decreasing crop and forage production. This could lead to increased dairy imports from the region.
IR: In Iran, the driest conditions in 53 years have brought chronic mismanagement of water resources to a crisis point. Dairy production is expected to be severely affected, prompting higher imports.

Milk Prices

The decline in the milk futures has not been unexpected. Strong milk production in major milk producting nations and increasing inventory were expected to impact prices. However, strong USD has also taken buyers out of the market.
Due to strong demand and feed production discrepancies in some regions, high feed prices were anticipated to impact overall milk production. However, that has not yet materialized.

Heard in the Market

Geopolitics/Policies/Macro
US: The Farm Service Agency reports that more than 18,900 operations or 75% of all dairy farms with established production histories are enrolled in the Dairy Margin Coverage program for the 2021 calendar year (enrollment closed Dec. 11, 2020). This is a 50% increase from 2020, when just over 50% of all dairy operations were enrolled. Part of this increase is due to the extreme price volatility experienced due to COVID-19 pandemic induced market fluctuations that pushed many to enrol in an attempt to manage future risk exposure. Recent news of a seventh consecutive month of payouts has many producers grateful for their enrollment decision.
NZ: Farmers feeling the pressure of regulation changes, environmental criticism – MP Kuriger
US: USMCA hearing focused on dairy, naming discrepancies.
ID: Indonesia Ministry of Agriculture (MOA) has issued a new regulation requiring Import Recommendations for soybeans. However, an implementation may depend on corresponding regulations from the Ministry of Trade (MOT).
UK: Farmers in England will be able to spread slurry or manure in autumn, providing there is no pollution risk, following the Environment Agency’s decision to relax enforcement rules until the end of February 2022.
IN: India will launch a 110 billion rupee ($1.48 billion) plan to boost domestic oilseed production to make the country self-sufficient in edible oil, Prime Minister Narendra Modi said the move will cut costly vegetable oil imports.

Merchant/Market/Weather
IN: India’s 4th advance estimate indicates 2020-21 food grain production amounted to 308.65 million MT, up 11% from the prior cycle. Pulse production hit a record 25.72 million MT.
With sugar prices skyrocketing worldwide, will India’s decision to divert sugar for fuel production add to global food inflation risks?
Petrol and diesel prices remained stable at record high levels for the 22nd day in a row today.
India’s sunflower oil imports could rise to a record in 2021/22 as potential bumper crops in Russia and Ukraine pull prices below rival soy oil, making it lucrative for price-sensitive buyers from the subcontinent industry officials said. India is the world’s biggest importer of edible oils, and higher purchases of sunflower oil could help exporters such as Argentina, Russia, and Ukraine dispose of surplus output.
BR: Brazilian corn exports fall 52% in the first week of August after crop failure IQ: Iraq grain buyer to import wheat from 2022 to compensate for lower local harvest yield. Iraq procured 3.365mln tonnes of wheat from farmers this year.
US: USDA’s latest U.S. corn export estimate for the 2020-21 year ended this month is 72.4 million tonnes (2.85 billion bushels), but only about 66 million have shipped through July. That would require August exports to top 6 million tonnes and reach a new record. Corn Production Up 4 Percent from 2020; Soybean Production Up 5 Percent from 2020; Cotton Production Up 18 Percent from 2020; Winter Wheat Production Down 3 Percent from July Forecast.
ML: Malaysian palm oil futures hit an all-time high and notched a new record close of 4,511 ringgit/t as end-July palm oil stocks in Malaysia fell 7.3% on the month, much more than expected. The 7.4% surge in futures was the biggest daily gain since January 2009.
BR: Brazil’s ANEC forecasts Brazil will export 17 mln tons of corn in 2020/2021, down from 34.8 million tons in the previous year.
CN: China has lowered its estimates of soybean imports in 2020/21 following a decline in crush margins, the Ministry of Agriculture and Rural Affairs said. China’s 2020/21 soybean imports were seen at 98.6 million tonnes, down 1.84 million tonnes from last month’s estimates, as the crushing volume of soybeans has fallen since July because of declining margins, the report said.
AR: The severe drought in Argentina is expected to continue to cause logistical issues and increase costs into 2022. Argentina is the world’s largest soymeal exporter and the third-largest exporter of corn.

Consumers/Sustainability
Global: The popularity of cover crops has grown significantly over the past few years. The benefits cover crops provide to improve soil health are well documented. Additionally, cover crops can benefit dairy producers as a forage source for the young stock by saving higher quality forages for lactating cows. To optimize the use of cover crops, dairy producers should consider grazing, harvesting, and feeding techniques.
AU-NZ: There is a flaw in the Australia New Zealand Food Standards Code, i.e. allowing products to use a term, provided the context clarifies the intention. The provision uses the example where ‘soy milk’ is permitted with ‘soy’ as the qualifier that sets the context and intention, which permits the use of the word ‘milk’. ADF is calling for changes to the food standards in Australia so that consumers trying to make a healthy choice at the supermarket have the benefit of transparent and accurate product labelling.
NZ: NZ dairy farm Happy cow milk reaches a $ 500,000 fundraising target for ethical dairy business.
The IPCC’s Sixth Assessment Report (AR6) summarises the latest climate change science worldwide. It outlines recommendations that more must be done to limit warming to 1.5 degrees Celsius to meet the global target. The report endorses New Zealand’s split gas approach, which recognises the difference between biogenic methane and long-lived gases and that biogenic methane does not need to be reduced to net zero. It recognises that New Zealand showed leadership in its split gas approach.
AU: Dairy farmers in north-east Victoria are leading an industry response to climate change — identifying changing rainfall patterns, increased temperatures, availability of water, weather extremes and access to health services as challenges and/or opportunities for the next decade.
Naturo’s patented Haelen method of extending the shelf life of fresh milk is world-first and has the potential to boost Australia’s dairy industry with new export opportunities and an increase in farmgate prices.
CN: Chinese dairy giant Yili has predicted that local consumer demand for value-added and sustainable dairy will likely increase over the next decade, with the backing of technological innovation to solve local industry challenges.
US: California’s dairy industry is one step closer to achieving net-zero emissions by 2050. Trinkler Dairy Farm was selected as the first site for a pilot program to test novel methane-cutting technologies.
The a2 Milk Company – maker of ‘tummy-friendly milk containing only A2 beta-casein protein – is continuing to generate double-digit growth in the US market while overall US retail sales of dairy milk continue to decline, says the company, which is planning moves into new categories.
Dairy processors could benefit from cloud-based label management. Human error can be reduced with a standard, enterprise-wide label management approach, and many issues can be prevented before problems arise. For example, standardized templates containing the right data can be stored centrally, and access can be granted based on a user’s function, enabling more oversight of who can use, edit and create label templates.