A recovery in global dairy prices is unlikely to emerge until late 2015 or early 2016 according to the latest dairy market quarterly update from Rabobank. The report also notes that the world is still producing more milk than the market currently needs – an imbalance that is unlikely to correct itself in the short term.
Already this year, the prices of key dairy commodities have fallen 20% to 30% between mid-March and the end of June. After marginally declining in the opening months of the year, global milk production from major export regions increased compared to previous years as a result of improved weather and the removal of EU dairy quotas.
The quarterly report from Rabobank adds that despite the ongoing demand weakness from China and the closure of the Russian market, other buyers stepped in to take most of the extra product albeit at weaker prices.
Rabobank says it expects dairy prices to begin recovering in late 2015 or early 2016, after a period of slow production growth coincides with the stabilisation of Chinese imports and improved consumer demand created by a period of lower retail pricing and ongoing income growth.
However, the rate of recovery for dairy prices will initially be dampened by the need to work through excess stocks before gaining greater momentum in the second quarter of 2016.
Already this year, the prices of key dairy commodities have fallen 20% to 30% between mid-March and the end of June. After marginally declining in the opening months of the year, global milk production from major export regions increased compared to previous years as a result of improved weather and the removal of EU dairy quotas.
The quarterly report from Rabobank adds that despite the ongoing demand weakness from China and the closure of the Russian market, other buyers stepped in to take most of the extra product albeit at weaker prices.
Rabobank says it expects dairy prices to begin recovering in late 2015 or early 2016, after a period of slow production growth coincides with the stabilisation of Chinese imports and improved consumer demand created by a period of lower retail pricing and ongoing income growth.
However, the rate of recovery for dairy prices will initially be dampened by the need to work through excess stocks before gaining greater momentum in the second quarter of 2016.
Source: FarmersJournal