Long-term dairy fears allayed by OECD report

By Neil Merrett

- Last updated on GMT

Related tags: Milk powder, Milk, Powdered milk

Growing fears among dairy processors over continued increases in
the cost of ingredients like milk powders could be allayed by new
findings from the Organisation for Economic Co-operation and
Development (OECD).

Though prices for many important dairy ingredients are generally expected to increase during the next two years, they will stabilise in the long term, the Agricultural Outlook report found. Compiled in conjunction with the Food and Agriculture Organization of the United Nations (FAO), the findings will be welcomed by dairy manufacturers, which are facing increased prices for raw materials amidst global supply concerns over dwindling milk stocks. Though production rates for whole milk powder continue to rise steadily ahead of consumption levels, the report estimates prices will continue to rise steadily, peaking at $263/100kg in 2008, from an estimated $229/100kg in 2006. Despite this increase, after 2008, the report expects prices to decrease to a more stable level, with an average cost for whole milk powder between 2009 and 2016 of $251/100kg. Skim milk powder will also follow this pattern with prices expected to peak in 2008 at $269/100kg, from an estimated $235/100kg in 2006. Following a gradual price decline in 2009, the average price for the product up to, and including 2016, will be about $235/100kg. The global price for butter will rise continually towards 2016 to $223/100kg from an estimated value of $186/100kg in 2006. This change is expected to be driven by consumption rates increasing past global production levels from this year onwards. Demand for cheese is also expected this year to outgrow production levels, though after peaking this year, the global price for the product will stabilise along with those of whole milk and skin milk powder. Despite rising to $311/100kg during the year, from an estimated value of $273/100kg in 2006, the average price between 2009 and 2016 will be $303/100kg.

Related topics: Manufacturers

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