Argentina is to lead dairy exporters on another round of rising world milk production next year, boosted by good weather and high profitability, adding to the competition for import orders – notably from China.

The South American country's dairy sector is next year to continue its recovery from the 2009-10 drought, when 30% of calves died, with farmers attracted by profitability better than that obtained by many arable growers.

"Current returns on soybeans are significantly lower compared to dairy," US Department of Agriculture staff in Buenos Aires said.

"Milk production is forecast to increase further," albeit by 3.8%, behind the 13.1% growth seen this year, which witnessed the bulk of the sector's recovery.

Export surge

Nonetheless, at 12.45m tonnes, 2012 milk output will hit a record high, up by nearly one-half in a decade.

And, with domestic consumption already high, at 210 litres per capita, much will be surplus to Argentina's own requirements, and "be processed into whole milk powder, which will then be exported", the USDA attaches said in a report.

"Total exports of dairy products are expected to increase significantly in response the anticipated increase in milk production."

Whole milk powder shipments will rise 12.6% to a record 250,000 tonnes, much to other South American countries, but also to the Asian countries which are a battleground for many dairy exporters.

"According to contacts, Argentina's exporting efforts are now geared… also towards increasing exports to China and the Asian countries," the briefing said.

'Ideal conditions' 

The comments follow a round of data showing buoyant recent production in major exporting nations, including the US, where output rose 2.1% last month, from October 2010, boosted by nearly 100,000 extra cows in milk, and a 17-pounds-per-cow rise in productivity.

In New Zealand, the top exporter, output in the June-to-September period, the first four months of 2011-12, was 11% higher than a year before, industry data showed.

"This increase in milk output is mainly due to the prevailing weather conditions this year generally being ideal for pasture growth," Agrifax analysts said, noting that September last year New Zealand witnessed snow, flooding and earthquakes.

Indeed, New Zealand's government has eased restrictions on milk tanker tonnage to ensure processors can catch up with the output growth, although there appear some signs of the rate slowing as comparisons with last year become tougher.

"Milk production growth for the season to date is now below 10% and this figure is expected to continue to fall as the season progresses," Agrifax said.

More and more milk

And milk output is expected to continue growing next year in these countries too, albeit at slower rates than Argentina, by 1.3% to 198.4bn pounds in the US, and by 1.8% to 19.0m tonnes in New Zealand, on USDA estimates.

In Australia, another significant exporter, output will rise 2.1% to 9.75m tonnes, and in top producer the European Union by 0.8% to 143m tonnes, including a small contribution from goats' milk.

Brazil's output is expected to increase by 2.3% to 31.3m tonnes.

While India will see fastest growth, at 4.5% to 127m tonnes, including milk of all types, its production is all consumed domestically.

The recent output rises, and expectations of more, have raised fears for a fallback in milk prices.

However, prices rose at the latest globalDairyTrade auction, last week, run by New Zealand's Fonterra, for only the second time in five months.