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International dairy prices recovering

International dairy product prices have been recovering rapidly since May 2016. At present prices are on average 48% higher than the lowest level reached in May 2016.  The IFCN combined world milk price indicator passed the US$30/100 kg milk in September, after it had remained below US$30 for 15 months.  The recovery in global dairy product prices was caused by a decrease in the growth of milk production. Such growth has come to an end in the European Union, and production in Oceania is lower than in 2015. The same is true for many South American countries. Total global milk supply growth slowed down to negative growth in September 2016. Positive demand side factors also influenced global prices. The global market is not as depressed as it was in 2014, Chinese imports increased by 22% year on year in the first half of 2016 and both the EU and USA managed their intervention stocks carefully.

Prices on the Global Dairy (GD) trade auction held on 5 October were 3% down on the previous auction at the end of September. However, the GD trade-weighted price index is at 885, still 41% higher than in March 2016.  Prices will probably stabilise at current levels.

Published on Monday, 10th October 2016 - 15:38

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