A major bounce in milk prices in the second half of the year is unlikely given the continued growth in global output, Ornua has reiterated.

The dairy marketing body doubled down on its assessment of last month that strong milk supplies in most of the world’s main dairy regions meant a significant increase in prices over the coming months was improbable.

“The June report concluded that concerns about milk supply and future demand suggest that the potential for significant price growth in the second half of the year is limited.

“While the growth rate of global milk supply has steadied, there are no clear signs of a significant slowdown,” Ornua claimed in its July report.

“While oil prices have fallen, the delicate peace deal in the Middle East has not yet had a positive impact on dairy markets,” the Ornua report pointed out.

And although demand for dairy produce was strong in the first quarter and into April, Ornua maintained that consumers are now “more sensitive to higher prices” and that this is affecting spending behaviour and prompting more caution among buyers.

“Pricing for European cheese, butter and [skimmed milk powder] has eased compared with last month’s report,” Ornua noted.

However, Ornua conceded that the market “has stabilised”, and that “powder futures and spot milk and cream prices are showing positive signals”.

In terms of milk supply, the Ornua report put global milk growth from January to May at 3.6%. The US was up 2.8%, Australia up 2.9%, the EU up 3.8%, New Zealand up 5.4% and Argentina up 6%.

Within Europe, Ireland was one of the few countries with a reduced supply (back 0.2%). In contrast, British milk supplies were up 2%, Italy up 2.6%, Poland up 3.3%, France up 3.5%, Holland up 4.9% and Germany up 6.6%.

Meanwhile, a new report from RaboResearch has found that the US and the rest of the Americas are eating into Europe’s traditional dominance of global trade in dairy produce.

The EU remains the largest dairy exporter, accounting for around 27% of global trade, but its share has gradually declined from close to 30% in 2017.

The US share of the global dairy trade has increased from 10% to 14% during the same period, with increased cheese exports helping to power this growth. Cheese exports out of Argentina and Uruguay have also grown significantly, according to the RaboResearch report.

“Global dairy trade continues to expand at a resilient pace, but the balance of power is shifting,” said Tom Booijink, senior dairy specialist at RaboResearch.

“We are seeing a gradual redistribution of export share away from Europe toward more competitive and less constrained producers in the Americas,” he explained.

China remains the world’s largest importer of dairy produce, but imports have declined significantly from their 2021 peak.

“Exporters are increasingly looking to alternative growth markets, including Southeast Asia, the Middle East, and Brazil,” said Booijink.

Cheese has now become the “main engine” of dairy trade growth, according to Booijink.

Global cheese trade has increased by roughly 40% since 2017, the RaboResearch report stated.

Whey is also growing in importance – but in value rather than in volume terms.