Australia - country

World Milk Production Begins New Year Weak

Tue, 02 Jan 2024 17:43:12 GMT

Declining world milk supplies have tightened global dairy markets and contributed to some recent price gains, such as the recent rise in the Global Dairy Trade index. According to Monica Ganley, analyst with the Daily Dairy Report and principal of Quarterra, an agricultural consulting firm in Buenos Aries, “Milk production has been slipping across the world’s main dairy-exporting regions and countries as margin pressures, weather challenges, and regulatory burdens weigh on volumes.”

In October, combined output across the world’s top-five dairy exporters fell 1.2% below year-earlier levels, marking the third consecutive month of contraction and the deepest year-over-year loss since May 2022. The most severe absolute losses occurred in Europe, Ganley said. In the European Union and United Kingdom combined, milk production tumbled 1.7% in October, a drop of 224,000 metric tons (MT).

“The reduction in the EU and UK milk supply represented 70% of the total decline seen across all the key exporters. Industry stakeholders suggest that falling milk prices this past autumn undermined profitability, and as expectations intensified for an increasingly restrictive regulatory environment in Europe, many producers chose to exit the business permanently,” Ganley said.

Losses were also seen across the Atlantic. For example, in the United States, thin margins and a declining milk herd pushed year-over-year production down 0.7% or 61,000 MT. Milk output slipped another 0.6% in November, compared to the prior year, marking the fifth straight month of year-over-year declines in the United States. In November, the U.S. milk-cow herd shrunk to a three- year low, setting the stage for sustained contraction in U.S. milk output.

Meanwhile, in Argentina, where a new government has created an economic shock, output fell 4.3%, or 49,000 MT. Argentina’s new president, Javier Milei, has promised to restore the country’s ailing economy by slashing government spending and implementing sweeping reforms. Many of the proposed reforms have profound implications for the agricultural and dairy sectors, Ganley reported. In the first week following his inauguration, Milei announced a more than 50% devaluation of the official exchange rate, which will have multiple impacts for the dairy industry, she said.

“For exporters, it will increase the amount of money that hits their bank accounts, since exports are paid at the official rate. However, it will also make dollar-denominated inputs more expensive for the sector in peso terms,” she said. “Another key initiative is the implementation of a 15% export tax across nearly all products. However, Argentina’s dairy sector was successful in securing an exemption from this rule. As a result, Argentina’s dairy exports will become more competitive in international markets as export taxes will be 0% as opposed to the 4.5% to 9% levied in recent years.”

In Oceania, New Zealand production dipped a modest 0.3% in October, while in Australia, the only key exporter to see volumes rise, output rose 2.1% vs. the same month last year, adding about 19,000 MT of milk to the global total.

“Looking forward, the situation remains precarious,” Ganley said. “Even though most of the factors that have been pressuring milk production lower are likely to persist, global demand remains weak, suggesting that further milk production losses could be necessary before milk and dairy product prices are able to move much higher.”

For more on milk prices, read:

El Niño Intensifies Following Four-Year Hiatus

Mon, 23 Oct 2023 17:01:28 GMT

The weather phenomenon known as El Niño has arrived and is now intensifying after a four-year absence. According to Monica Ganley, analyst with the Daily Dairy Report and principal of Quarterra, an agricultural consulting firm in Buenos Aries, El Niño could have profound impacts on agricultural production, including dairy output, across the globe in coming months, at the same time food insecurity is increasing.

“While the effects of El Niño vary, the weather phenomenon will undeniably impact agricultural and dairy production over the first six months of 2023. Though in some cases, a specific set of weather conditions can boost production, generally, the disruptive conditions caused by El Niño will likely reduce production and put upward pressure on agricultural commodity prices, including dairy products,” Ganley said. “In today’s current geopolitical climate, the effects of El Niño could exacerbate the issues created by the war in Ukraine and unrest in the Middle East, intensifying concerns about food insecurity across the globe.”

According to the National Oceanic and Atmospheric Administration (NOAA), El Niño is likely to be the dominant weather phenomenon through the first half of next year, with a 75% to 85% chance it will be classified as a strong event. Unfortunately, El Niño has arrived amid a global food crisis in which more than 800 million people worldwide do not have enough to eat, and when Russia’s war of aggression continues to limit agricultural exports from Ukraine, a major supplier of food to the Middle East and Africa.

“Many agricultural producers are now preparing themselves for the weather shifts that would be consistent with an El Niño effect,” Ganley said. “In the northern tier of the United States, the next few months are expected to be relatively dry, and temperatures are forecast to be warmer than normal. Mild weather could help winter crops in northern states, but analysts caution that a lack of snow cover could also create adverse conditions. On the positive side, producers may be able to plant earlier this coming spring as warmer temperatures will likely lead to an earlier thaw.”

Meanwhile, El Niño tends to bolster the subtropical jet stream, which could bring stronger storms to the southern tier of the United States. In the past, years with a strong El Nino, such as 1982-83 and 1997-98, California and the Southwest have seen much wetter winters. Andrew Hoell, research meteorologist with NOAA’s Physical Science Laboratory in Boulder, Colorado, told the Washington Post that “strong El Niño events increase the likelihood of above-average precipitation in the Southwest, and they do so to the tune of about 40, 50 or 60%.”

The effects of El Niño could be equally as disruptive in other parts of the world. Throughout Central America and the northwestern rim of South America, El Niño typically brings dry conditions, which is bad news for dairy producers in those areas who depend disproportionately on grazing their cattle, Ganley said.

“El Niño will also likely bring wet conditions to key dairy areas in the continent’s southern cone, including Argentina and Uruguay. However, after three continuous years of drought, producers could welcome some additional moisture,” she said.

European producers will also likely face wetter-than-normal winter conditions, although precipitation could dissipate in the first quarter of next year, while New Zealand will likely experience a warmer summer, with less rainfall predicted for the North Island and wetter-than normal conditions for the South Island.

“In Australia, dry conditions and scorching temperatures will likely increase the risk of bushfires across the country,” Ganley said, adding that multi-year droughts on the continent have already devastated the dairy industry there.

For more on weather, read:

Australia’s Dairy Problems Persist

Mon, 14 Nov 2022 22:03:23 GMT

Once a powerhouse on the global dairy trade circuit, Australia’s dairy industry has been contracting due to successive long-term droughts, numerous heat events, and an ongoing labor crisis.

According to recent article in Bloomberg, Australia’s share of the world export market dropped from 18% in the 1990s to about 6% in 2018 as Australian producers steadily left the business. Gains made by other major exporters have also worked to whittle away Australia’s share of the global dairy market, said Sarina Sharp, analyst with the Daily Dairy Report.

“Despite high milk prices and decent weather early this season, Australia’s milk output has continued to drop,” Sharp said.

September’s milk collections in Australia fell 6.25% from year-earlier levels to slightly more than 800 million liters, the lowest September milk volume in decades, according to Sharp. Season to date through September, milk production in the country was 6.3% lower than the comparable period last season, compounding a 3.4% decline in the 2021-22 season.

“Production in October likely fell short of last year’s volume as well,” Sharp said. “Heavy October rains led to flooding in eastern Australia, which is home to most of the country’s dairy herd. In Victoria, which accounts for nearly two-thirds of Aussie milk output, some producers were forced to dump milk because their farms were inaccessible, but floodwaters have since started to recede.”

For decades, Australia, which is the driest inhabited continent, has been battling heatwaves and droughts. Between 1997 and 2020, widespread drought affected the country, and the dairy industry, in 27 of those 33 years, according to Bloomberg.

On the upside and unlike in the world’s other large milk-producing regions, feed supplies in Australia are currently abundant and relatively affordable, Sharp said. A recent USDA Global Agricultural Information Network report noted that milk prices in Australia have hit record highs and hay prices are low and feed grain prices are likely to decline, improving margins for dairies.

“Nonetheless, output is in the doldrums and likely to remain there. Labor shortages are so extreme that USDA expects them to hamper milk production in both 2022 and 2023,” Sharp added.

In fact, Australia’s labor shortage is so severe that some dairies have partially or fully transitioned to less labor-intensive beef cattle operations, due in part to record-high beef prices.

“With less milk overall, Australia is devoting a greater share of its output to cheese manufacturing this year, at the expense of butter and powder production, which will likely result in at least modest declines in exports of butter, skim milk powder, and whole milk powder next year,” Sharp said.

The production shift could also chip away at Australia’s share of the world dairy market, softening the impact of weakening overall global dairy demand this coming year, and longer-term allowing U.S. exporters to potentially pick up a share of the world market.

For more on dairy exports, read:

Giant Australian Steer has U.S. Competition for World's Largest Bovine

Fri, 20 Nov 2020 05:19:21 GMT

An Australian steer the height of a professional quarterback has some competition for world’s biggest bovine and a good chunk of them are American cattle.

Knickers, a nearly larger than life Holstein , captivated the internet because of his size. The steer from Western Australia weighs more than 3,000 lb. and measures in at 6 foot 4 inches. At that height Knickers is not only the same size as Super Bowl winning quarterbacks Tom Brady and Eli Manning, the steer is in the running for world’s tallest steer.

Once news spread of Knickers size a host of cattle stepped up to the measuring tape to throw their names into the contest.

A California steer named Cowboy comes in at very similar measurements standing 6 foot 4 inches and weighing 3,000 lb.

“He’s just under a hair, and when I mean hair, a hair, under the Guinness World Record for largest steer,” says Lindsey Krause, owner of Cowboy.

To the north, a steer at Kismet Creek Farm in Manitoba, Canada , named Dozer measures in at 6 foot 5 inches. Similar to Cowboy and Knickers, the Canadian entry to the contest is also a Holstein.

“He’s just the friendliest animal,” says Canadian farmer Karl Schoenrock of his large steer Dozer. “He’s not very intimidating at all, except for his size. If you stood next to him he’ll just lay down next to you.”

Back in the U.S., Mississippi farmer touts two steers that could be in running for world’s biggest steer.

Bubba Pinkard’s two steers, named Milo and Otis for the kid’s movie of the same title, weigh a combined 5,900 lb. Milo comes in at 6 foot 7 inches and 3,200 lb., eclipsing Australia’s viral sensation by 3 inches.

“I believe I’ve got Knickers beat with this old boy right here,” Pinkard tells local news station WLBT while sitting atop Otis with his buddy Milo nearby.

Otis is at nearly the same size as Knickers weighing 2,700 lb. and measuring 6 foot 4 inches. The two steers eat about 100 lb. of range cubes per day and feed on hay or graze grass to help keep their size.

“I saw that Knickers, they had him in a pen with a bunch of what I call yearlings,” said Pinkard. “They were young cows, young calves and if I put this one against a young calf, he’s gonna look huge.”

If Pinkard’s two Mississippi steers don’t qualify for the Gunnies World Records there might be another bovine in the Magnolia State that could qualify for its lack of size. Lil’ Bill, a premature calf weighing only 7.9 lb. , is also capturing the hearts of people online after Mississippi State University College of Veterinary Medicine shared a picture of the calf on Facebook. The small calf is being cared for by veterinarians and they are trying to determine if Lil’ Bill suffers from a form of dwarfism.

AgDay TV national reporter Betsy Jibben has been doing her own research into the world’s biggest bovine and she found a young dairy cow named Paige who could contend in the future:

Forget Knickers. Meet Paige. She’s only 68 inches tall 😜 (and from a California dairy). #agchat pic.twitter.com/C27PDxpiff
— Betsy Jibben (@BetsyJibben) December 10, 2018

For more on big and small cattle read the following stories:

First Thing Today: High Aussie Wheat Prices Could Shift Some Business to the U.S.

Thu, 12 Nov 2020 04:42:17 GMT

Good morning!

Profit-taking weighs overnight... Corn futures are fractionally to a penny lower as of 6:30 a.m. CT after a quiet overnight session. Soybeans are trading near session lows with losses around 6 cents as traders took advantage of yesterday’s gains with some profit-taking. Winter wheat futures are down roughly 2 cents, while spring wheat is up a nickel. The U.S. dollar index is holding near unchanged after yesterday’s Federal Reserve-inspired surge.

Weekly Export Sales Report expectations...

Commodity	2016-17 (MT)	2017-18 (MT)
Corn	NA	700,000 to 1,000,000
Wheat	NA	300,000 to 500,000
Soybeans	NA	1,200,000 to 1,500,000
Soymeal	25,000 to 100,000	50,000 to 150,000
Soyoil	0 to 10,0000	0 to 20,000

High Australian wheat prices could shift some business to the U.S.... Australian wheat producers have been slow sellers of their smallest crop in eight years, lifting its wheat prices above the international market. Traders report that new-crop Australian standard white wheat is quoted at $245 per MT, including cost and freight (C&F), into southeast Asia. Similar-quality wheat from the U.S. is being offered at $235 per MT including C&F and Black Sea region supplies that are going for around $215 per MT. It’s pretty unusual for U.S. prices to be lower than Australia’s at this time of year. The situation could send some Asian business to the U.S.

Cocereal trims EU wheat and corn crop pegs... The European Union’s soft wheat crop likely totals 142.1 MMT, estimates the grain industry lobby Cocereal. This is up 100,000 MT from its estimate at the end of May and well above last year’s crop of 135.5 MMT. The lobby group also trimmed its estimate of the bloc’s corn crop by 700,000 MT to 59.3 MMT, which is also down 1.5 MMT from year-ago.

Cofco optimistic about pig feed demand... China’s hog and sow herds have recovered, an executive with Cofco International said at a conference today, so its pig feed demand forecast is “optimistic.” Therefore, the state-owned food processing company expects China’s soymeal demand to climb 6.5% in 2017-18 to 72.1 MMT. On the other hand, feed demand for broiler chickens will likely decline the latter half of the year as tough environmental inspections have damaged production, the executive explained. China’s broiler breeding stock continues to decline as bird flu has limited imports.

Brazilian mills may boost ethanol production at the expense of sugar... Mills in Brazil’s center-south region may cut sugar output by 500,000 MT to 1 MMT and boost ethanol production by 1 billion liters to 24.8 million liters, according to Luiz Carlos Correa Carvalho, head of the Canaplan consultancy. He explained that profit margins for ethanol have climbed to levels that rival those for sugar, resulting in a trend reversal. Ethanol use is on the rise in Brazil after its government made taxation changes that favored ethanol over gasoline in July.

NAFTA a big deal for Cargill... Around 10% of Cargill’s revenues are related to the North American Free Trade Agreement (NAFTA), the company’s Chief Executive David MacLennan said yesterday. Therefore, he says the worst-case scenario for the company would be if the pact was “torn up,” adding that a “significant portion of our corn sweetener business is NAFTA-related.” MacLennan also noted that while the deal has provided “significant benefits” to agriculture, improvements could be made.

Congressional delegation and USDA’s Perdue heading to Texas to assess impacts of Hurricane Harvey... The congressional delegation is heading to Houston for a briefing and to view infrastructure damages. Lawmakers including Texas GOP Sens. John Cornyn and Ted Cruz, House Speaker Paul Ryan (R-Wis.), Appropriations Chairman Rodney Frelinghuysen (R-N.J.), Homeland Security Appropriations Chairman John Carter (R-Texas) and members of the Houston congressional delegation will be briefed on Hurricane Harvey recovery efforts. The group will take an aerial tour of storm damage and infrastructure to mitigate flooding. They are also scheduled to “help local residents clean out damaged homes,” according to Ryan’s office. USDA Secretary Sonny Perdue will also be in Texas for the next two days, and will be joined by House Agriculture Chairman Mike Conaway (R-Texas) in holding a roundtable with producers in El Campo, southwest of Houston.

Futures still signaling a bias for higher cash cattle trade... A total of 636 head of cattle sold at the online Fed Cattle Exchange auction Wednesday at an average price of $106.67, up nearly $2 from last week’s sales at the auction. A similar increase for cash trade in the traditional market would point to cash action around $108 this week. So far, a few hundred head have sold in Kansas and Texas mostly around $107. Futures have an even bigger increase factored in, with the October contract settling just shy of $111 yesterday.

Hog bids still slipping despite record-setting kill numbers... The past two days of hog slaughter have matched the 455,000 head daily record, but packers have still been able to lower cash hog bids and add to wide profit margins since supplies are abundant. In fact, weight data for the Iowa/southern Minnesota market shows marketings are still backed up. Until supplies and demand become more balanced, the upside for futures will remain limited. Cash hog bids strengthened on a national basis yesterday, but several days of improvement will be needed to shift attitudes.

Overnight demand news... Egypt purchased 60,000 MT of soyoil and 31,000 MT of sunflower oil.

Today’s reports:

7:30 a.m., Drought Monitor -- USDA/NWS
7:30 a.m., Extended Weather Outlook -- NWS
7:30 a.m., Weekly Export Sales -- FAS
2:00 p.m., Livestock Slaughter -- NASS