Global milk supply increased in August, but the rate of growth was again modest.

While European flows returned to growth, New Zealand flows were weaker.

You can see in the interview with the New Zealand Minister for Agriculture on agribusiness pages this week that he sets a downward tone for milk supply in New Zealand.

We can take from this that milk supply is not going to increase in the short term and could possibly decrease as some farms revert to drystock or carbon farming, and that’s at record milk prices of over NZ$8 per kilo milk solids in New Zealand at the moment.

Industry sources suggest it’s unlikely that global supply growth will exceed +1.0% in the second half of the year and the full-year growth estimate has been revised down to +1.3%.

The European market was boosted by buyers returning from holidays and despite sluggish food service and export demand, prices increased with weaker milk flows, supply chain issues and wider inflationary pressures boosting dairy market sentiment.

The GDT also firmed in September after weakening through the summer.

European cheese, butter and skim prices increased in recent weeks, while the casein market has been stable to firm at a high level (see Ornua purchase in news pages).

Futures also indicate prices should be stable to firm for the rest of the year. Hence Irish milk processors have increased September milk prices this week as predicted last week.