‘Enough milk to last 50 years’, reveals report

milk-rosipaw-flickrA record payout to New Zealand’s dairy farmers in 2013 has the stage for a global milk surplus that Goldman Sachs predicts will last half a decade, according to a report

The investment banking firm said that the world’s top exporter will expand production to an all-time high, the government predicts, after a 2013 surge in prices led to investment in more cows and nutritional supplements that boost milk flow, just as pastures recovered from a drought.

Annual global dairy output will exceed demand by two billion litres through 2018, Goldman Sachs added.

Bloomberg reported that a rebound in New Zealand supply is adding to gains in Europe and the US, overwhelming demand growth in China that helped send global dairy prices tracked by the United Nations to a record in February 2014.

Michael Harvey, Australia-based analyst at Rabobank International, said, “Supply is putting pressure on the market. There is a lot of milk that needs to be soaked up before we start to see any price increase.”

New Zealand’s output will rise to 1.856bn kg of milk solids in the year ending May 31 as the herd expands, up from 1.815bn kg a year earlier, the Ministry for Primary Industries said. The country’s dairy herd expanded 11 per cent from 2010, USDA data show. The herd was five million on July 1 this year, slightly low from a record 5.01mn a year ago, and will expand to 5.1mn on July 1, 2015, the government estimated. It’s the world’s largest exporter of butter and whole-milk powder, according to the USDA.

Global imports for whole-milk powder more than doubled since 2008 as the economy grew in China, the biggest buyer.

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