Global dairy markets remain strong with no signs of prices softening. Global milk supply increased by +0.7% in 2021, with supply falling for the past four months.

European milk flows were flat in 2021, with US output up +1.4%. In New Zealand, milk production increased by +0.1% in volume and +0.4% by solids. Milk supply in Argentina increased by +4.2%.  

Increasing input costs, particularly feed and fertiliser are preventing primary producers from fully availing of the opportunity afforded by high milk prices.

Inflation is a key concern and its impact on supply chains. The grave situation in Ukraine will impact on global agricultural markets as both Russia and Ukraine are key grain exporters and Russia is a key exporter of fertilisers and gas. Chinese purchases of dairy dropped in December and their participation in the market will be closely monitored in the year ahead.