According to a press release made by the State Statistics Committee of Ukraine, milk production in October has decreased 11.2% to 962.7 thsd mt. Moreover, in the last
ten months, milk output has declined 3.9% YoY to 10.3 mln mt.
Our view: The decline of milk production in October is mostly of a seasonal nature, as historically starting from October, milk output decreases.
The other reason for the decline in milk output is that the number of milk cows has drastically decreased over the last ten years (8% CAGR over the period 1997-2007).
We forecast a 6% decrease in the number of milk cows for 2008 and a slight decrease in milk output to approximately 12 mln mt. We believe that milk output will stay
around the level of last year on the back of increasing milk yields per cow (7% CAGR over the period 1997-2007).