Milk & Milk Powders Global Market Outlook

  • The global supply–demand dynamics scenario is trending toward oversupplied condition in both milk and milk powders. The regional differences and skewed trade dynamics are expected to govern the global price volatility in the near term 
  • Oceania is a key market, as it produces only 5 percent of the global milk, but contributes to more than 40 percent of the milk derivatives export market 
  • With the removal of milk quota system, Europe is expected to increase its production of milk and milk powders until 2018. The high output of dairy products will be directed to export, mainly to China

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Liquid Milk - Value Chain

The market complexity is considered to be high in the milk and milk powder market, due to standardization and multiple co-products in the value chain (nearly, 38 products in the tier-2 and 3 level), with majority of the products finding applications in the food & beverage industry

  • SMP is a standalone product from low-fat milk, with no co-products/by-products, while WMP is produced along with various other tier-3 co-products 
  • 91 liters of low-fat milk, with 0.5 fat yields 9 kg of SMP and 4.88 kg of butter (80 percent fat) 
  • 87 liters of standardized milk with 3.5 percent fat yields 13 kg of WMP and 2.85 kg of butter (80 percent fat)

Production and Manufacturing Technologies of Milk Powder 

Separation is the processing of milk with separators to create a skim and cream portions. Separation produces a skim portion that is less than 0.5 percent fat and a cream portion that is usually 40 percent fat

Liquid Milk - Supply–Demand Analysis

The global liquid milk market landscape is dominated by the top 5–6 regions, accounting for 80-85 percent of the production share. The market is oversupplied with production growing at a CAGR of 2.27 percent against consumption at 1.19 percent 
Global liquid milk production is 614 MMT, while milk powders account for nearly less than 1 percent of the liquid milk supply. This is mainly because Cheese, followed by butter, are products of higher profit compared to milk powder

Market Outlook (2018/2019) 

  • Despite the oversupplied market condition, regional differences and lop-sided trade dynamics are expected to govern the global price volatility in the market
  • Liquid milk, globally, is oversupplied by 430 MMT, however, less than 0.5 percent is traded, while nearly 50 percent of the milk powders are traded. These factors lead to divergent market dynamics of liquid milk and milk powders 
  • The growing GDP in the developing countries and CPI in OPEC countries are expected to boost the demand for milk and its derivatives

Liquid Milk - Trade Dynamics 

The European production quota lift and Russian ban resulted in an increase in European exports,  majorly to China. Weak cold chain logistics drive China’s liquid milk imports. The Chinese dairy firms have purchased foreign dairy companies for the purpose of re-exporting back to China, which aids the growth of UHT imports.