At this time of year, milk production is seasonally increasing in the northern hemisphere (US and Europe) while heading towards the winter/dry season in the Southern Hemisphere (Oceania and South America). Compared to the start of the year, the milk production prospects have brightened for Europe and New Zealand, while the US continues to post impressive growth.
In the US, milk production grew 2.3% vs. year ago in February (leap year adjusted), making it the sixth consecutive month of gains over 2%. Cow numbers increased another 4,000 head during the month and stand at a 20-year high, thereby providing plenty of firepower for additional milk growth this year. Weakness in California and the Pacific Northwest was more than offset by growth in the South Central Plains, Upper Midwest, and Northeast. Milk processing capacity limits have already been exceeded in the Northeast and the upcoming spring flush will create additional headaches handling milk.
Oceania production remains below year ago as slight growth in New Zealand is offset by continued weakness in Australia. In February, Australian milk output was 6.8% below prior year with all states producing less milk than February 2016. However, New Zealand milk output was up 0.6% from the prior year while milk solids were up 3.3%. The additional solids will likely increase product availability in the second half of their production season.
The European Commission recently forecasted a 0.6% increase in milk production for 2017 in Europe. While the number of dairy cows is expected to decline by 1.6%, increased efficiency in milk output per cow of 2.0% pushes the total production higher. The shrinkage in the herd is partly due to a loss of 380K cows from the Netherland’s Phosphate Reduction Plan. Milk production is expected to be about flat vs. year ago in Q2 with modest gains in the second half of the year. Milk prices have recovered to the low to mid-30’s, enough to stimulate production. Ireland is off to a slow start given poor winter weather, but other countries such as France as seeing milk output near year ago levels.
Ascending triangles are bullish patterns, usually seen in an uptrend as a continuation pattern, recognized by its unique shape formed with two trend lines: the resistance line is drawn horizontally at a level that has prevented the price from going higher while the supporting trend line connects a series of higher lows. In a downtrend, these right-angle triangles can form a reversal pattern. A common target price can be based on the height of the triangle.
Industry experts preview the April 11th Crop Production & WASDE Report focusing in on the Agricultural Markets.
This is a global trading summary of our Agriculture markets, featuring preceding month information on both futures and options contracts in the following areas:
It's one of several resources we offer to help you stay informed on our global benchmark products and the valuable risk-management solutions they provide.