The balancing act of milk supply and demand continues this week, with statistics showing us a continued growing European supply and a reduction in New Zealand milk supply. However, it seems the difference may not be significant enough to trigger a supply squeeze just yet anyway.

New Zealand’s North Island had over 50mm of rain last weekend, so that will replenish soil moistures and provide welcome growth to continue milk supply in the non-irrigated regions.

The most recent milk observatory statistics show European production is up 1.5% January to September compared with 2014. Ireland and the Netherlands lead the charge of the significant EU dairy export countries.

This week, Ornua’s Joe Collins has said that recovery in terms of higher prices for the dairy sector is unlikely until the second half of 2016, unless a substantial “corrective” weather event takes place.

Joe gave some hope by suggesting that China would eventually follow the pattern of other big dairy importers by moving from importing just powder to also importing butter and cheeses.

Joe also referred to positive movements in the US where EU butter consumption was up 3.7% in 2014, compared with annual average increases of 0.8% from 2004 to 2014.

Meanwhile, futures contracts for both WMP and SMP indicate prices may rise at the next Global Dairy Trade (GDT) auction, possibly recovering some of the recent losses.

Indications from the NZX derivatives market, the New Zealand-based exchange where dairy futures contracts are traded, suggest that the price of whole milk powder (WMP) may rise at the next GDT auction, pencilled for next week.