Worldwide forecasts for higher milk prices

In New Zealand, the milk price may set a new record, at least some analysts expect it. This includes Nathan Penny, dairy analyst at the New Zealand bank Westpac. The bank recently increased the forecast for the current season by $0,75 to $8,50 per kilo of Milk Solids (11,5 liters). If this expectation comes true, the existing record from 2013/14 will be broken. That year the milk price was $8,40.

Fonterra is keeping its cards close to its chest for now. In the sense that the New Zealand dairy cooperative calculates a wide range between $7,25 and $8,75 and an average forecast of $8. This is significantly higher than in the last season (2020) when the milk price was $7,54 excluding dividend. This month, the forecast for the current season (2021) will be adjusted again and there may be more clarity. For the time being, the forecasts are high, although the season (which runs from July to June) will still last a long time.

USDA expects higher milk prices 
The US Department of Agriculture (USDA) is also positive. Higher milk price forecasts were issued in the Wasde report, which was published this week. The USDA has revised this year's forecast up by $0,30. This brings the average milk price (all classes) to $18,45 per pound (0,45 kilo). For 2022, the Agriculture Ministry is even more positive and has even increased the forecast by $0,80 to $19,20 per pound. Although this level is far from breaking records, the forecasts are significantly above the current level of $17,70.

The expected milk price increase is prompted by a decline in the number of dairy cows and lower production per cow. The latter is related to the high feed costs that American dairy farmers are also confronted with. In addition, the availability of roughage in the Midwest is an issue due to the dry and hot summer.