Increased Milk Output Causes ‘Noticeable Drop’ in Prices

Milk prices are poised for a retreat of some 15% by the end of the year, undermined by a significant supply response to high values, reported Agrimoney.com, citing a source that also blamed record raw material prices for a cut to profit hopes.

One of the biggest U.S. dairy processors, in its forecast for full-year earnings, predicted a drop in its share prices, blaming elevated milk prices.

Prices of benchmark Class 1 milk hit a record high this month, up 38% year on year, lifted by strong global demand for dairy products, largely from the increasingly large and wealthy Chinese population. Domestic raw milk prices continue to be affected by global developments, resulting in values so far this year rising beyond expectations.

However, a top milk producer said conditions indicate a “noticeable decline” in milk prices in the second half of the year, with Europe and New Zealand increasing output.