Dairy stocks at rock bottom

Press, 8 March 1989, Page 5

Dairy stocks at rock bottom

World stocks of dairy products in the main milk-producing countries were at rock bottom, in contrast to the stockpiles of 222y 2 years ago, said the chairman of the Dairy Board, Mr Jim Graham.

The E.E.C.’s butter and skim-milk powder stockpiles had disappeared and the United States was holding no stocks of cheese or milkpowder, Mr Graham told the northern North Island dairy ward conference in Auckland yesterday. The United States, however, still held about 65,000 tonnes of butter in Government stores. “We will have no excess stocks ourselves of any products by the end of the season and Australia is in the same position.” Mr Graham said the reduction in the stockpiles was an incredible turnaround from 222y 2 years

ago when the E.E.C. had 1.5 million tonnes of excess butter and nearly a million tonnes of milkpowder. It was likely that European milk quotas would remain during the next year or so and that European production would provide no more than adequate supplies to the international market. In the United States, milk production was likely to increase 2 to 3 per cent, a slightly faster rate than the increase in domestic consumption. This could mean that the United States would increase its supply to world markets.

Mr Graham said he was worried about “very unrealistic” predictions of milkfat payout levels. The rapid improvement in the dairy industry’s fortunes had led to expectations that the payout would increase. As long as the New Zealand dollar remained near its present level, the dairy industry could look forward to earnings from the market of between $5 and $6 a kilogram of milkfat and perhaps up to $7. “We won’t see any more than that because there are limits on the capacity of the market to sustain ever higher prices,” he said.