A robust import programme by Chinese buyers, combined with a weather-impacted New Zealand season, were the perfect ingredients for the short-term rally in Q1 2018. In the background, the export increases, as production growth expanded across all other regions, according to the latest RaboResearch report ‘Dairy Quarterly Q1 2018: Turn the Pressure Down’.
The European Commission does not intend to purchase any skim milk powder (SMP) at the fixed intervention price in 2018, instead focusing on clearing the 375,700 tonnes of intervention SMP stocks, which will continue to pressure SMP prices and likely divert milk solids to other product streams.
Farmgate milk prices continue to weaken in Q1 2018 (albeit from a high base), and more downward pressure is expected. Meanwhile, the risk of higher feed prices is emerging.
You can find the report here.