1. The supply-demand conundrum

Substantially lower milk purchasing in China, a Russian slump and declining farmgate prices might not have conspired to completely halt supply growth, but output from the world’s top five suppliers has been sluggish.

The European Union, America, New Zealand, Australia and Argentina witnessed 2% production growth over the six months from April. However, based on USDEC estimates, this will be seen to have slowed to 1% for the remainder of the year.

For the most part, producers want milk flows to be below demand to wipe out a surplus. While this does not currently look to be the case, situations centred largely on Asia-Pacific might have some sway on whether this happens in 2016.

USDEC believes that producers will be looking at the impact El Niño, and the subsequent La Niña, might have on production, particularly in Australia and New Zealand.

Meanwhile, it is to be seen if European processors will continue to pay their farmers enough to keep contraction on hold.

And then there is the China question: will milk production for a vast population continue to climb, even as its dairy segment sees a pullback in investment to mitigate the need for imports?