The peak of the milk production season. What is happening in the dairy market?

Submitted by bashun on Tue, 05/22/2018 - 17:58

There is the highest milk supply in Ukraine now. However, the sale of surplus raw materials is rather difficult. The greatest problem is created by the difficulties encountered with the export of cheese products, INFAGRO reported.

Now a significant part of the raw material, which was previously intended to be used for the release of this commodity, must be redirected to drying. But taking into account the current prices of demand for skimmed milk powder and butter, drying, for example, is unprofitable.

There is a hope that closer to the middle of summer the situation on the world market will be positively adjusted and the prices for dairy products offered by Ukraine will strengthen. Analysts predict an increase in demand for dairy products from many importing countries against a background of a significant rise in price of oil (+ 28% compared to the previous year) and a weak US dollar (minimal over three years). At the same time, they admit that the prices for dairy products will grow only if world milk production increases by no more than 1.5%. Therefore, the situation on the Ukrainian dairy market depends, in part, on what the weather will be in Oceania, and whether the current pessimistic moods of European and American farmers will persist.

Meanwhile, it is extremely difficult to reach profitability for exporters of dairy products, because for this it is necessary to significantly reduce the purchase price of milk, which is very difficult, at least if it concerns the raw materials of agricultural enterprises. Now they are outraged more than usual, declaring the loss of dairy farming. Oils in the fire poured calculations of analysts FAO, which show a decrease in UDI (Ukrainian dairy index) in April at once by 13.3%.

In general, the profitability of milk producers in the first three months of the year was 8.2% less compared to the same period last year and the earnings of farmers fell. However, the situation is still far from crisis, given that last year the operating profitability of milk production in many farms reached + 40%. Therefore, there is hardly any reason to resent agricultural producers, especially since milk in the second half of the summer is likely to rise again.


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