Milk Price Forecasting

Milk Price Forecast - Dairy Commodity Price Forecasts

Note: all information on this website is for interest only and is not to be relied upon.

Milk Price Forecast 2019

Milk Price Forecast 2018

Predicting Dairy Commodity Prices is quite complex and dependant upon numerous global factors.

It is important for food manufacturing companies Procurement Managers buying large volumes of dairy ingredients are to be able to predict what dairy commodity prices are likely to do in the next week, month, year etc in order to either forward buy for six months or just a month or two. e.g. if you buy $100m of ingredients a year then a 1% saving is worth $1m.

It is also critical for Dairy Manufacturers to be able to forward forecast raw milk prices, (the main ingredient) which can be up to 80% of the cost of manufacturing some dairy commodities. This forecasting skill allows dairy manufacturers to forward sell their production at market prices and maintain their own and their customers competitiveness whilst fostering confidence and trust in their symbiotic relationship for the long term.

It is also important to help Milk Producers to understand what the future Raw Milk Farm-gate price movement is likely to be as well as indicate if feed costs are going to be volatile.

Prices swing like a pendulum and how far / how long the swing goes is dependent upon how hard the push is.

Some of the factors affecting Dairy Commodity Prices are:

1. Global Weather / rainfall - affecting grass growth through drought and reducing milk supply Countries likely to be affected with significant impact on global milk supply: NZ, Australia, USA Can you list any other countries with significant impact?

2. Global Weather / rainfall - affecting grain harvest through drought and increasing feed prices Russia, USA Can you list any other countries with significant impact?

3. India banning exports - what effect does this have in % of global demand terms

4. Russia banning imports - what effect does this have in % of global demand terms

4. Removal of milk quotas by the EU - what effect is this having / will this have in the short and long term

5. Prolonged Depressed milk price - Resulting in dairy farmers going out of business / ceasing production with reducing milk supply eventually contributing to increasing prices due to short supply.

6. Increased milk prices caused by a lack of supply resulting in Dairy Processors ceasing / closing down capacity.production resulting in less competition for the milk and a reduced price

7. New Dairy Factory capacity coming on stream.

Other factors can be included in the list as having a significant effect e.g. a significant incident such as melamine contamination in China resulting in local production being unacceptable to consumers resulting in significant import demand.

Whilst prices are falling as they are currently (August 2015) then buyers can become a little complacent.

The next upswing of the pendulum always results in manufacturers phone lines being "hot" with enquiries from Procurement Managers / Buying Directors wanting competitive quotes for thousands of tonnes. Don't wait for the pendulum to swing, be ready for it........

Link to further reading on factors affecting milk prices

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