WEATHER, SUPPLY ISSUES HIKE DAIRY PRICES

Dairy prices will continue to increase in the near future due to global weather, supply issues in the feed markets and strong demand from developing countries, according to speakers at the INTL FCStone's Dairy Outlook Conference in Chicago.

Experts in the dairy industry gathered for the 10th year to offer their views on macro-economic issues affecting the dairy markets as well as the impact of global supply and demand. Presentations covered the influence of markets like Ireland, New Zealand and India on the production and consumption of dairy products around the globe and how the changing tastes of consumers are shaping the dairy industry.

In a key point from the meeting, Robert Chesler, vice president of FCStone LLC's Food Division, explained, "we're seeing milk production increase in the U.S. with fewer cows and we're estimating total U.S. production reaching nearly 201 billion pounds in 2013."

"Through April of this year, the majority of our exports were bound for Mexico followed by Southeast Asia," he added, and Oceania increased its imports of U.S. dairy products 43% over last year.

In terms of production, Chesler estimated world milk production to increase by 170 metric tons in 2022, the majority of which, 70%, should come from developing countries like India. However, water remains the biggest threat to growing dairy production and developing countries need to solve some of their infrastructure issues before realizing those gains, said Chesler. Such a forecast calls for a growth rate of 1.8% per year which is far below the 2.3% growth rate of the previous decade resulting in increased prices.

"Consumption will increase at an average of 2.1% per annum based on robust international income growth, population growth and further westernization of diets," concluded Chesler.