Large scale imports of dairy products to China are inflating milk prices internationally, according to Rabobank. The international financial service provider’s report for the third quarter of 2013 claimed although international milk prices peaked in April, they remained strong through the third quarter of the year.
The report said although China has been a big importer of dairy for some time, the country bought 27 percent more milk in the second quarter of 2013 than in the previous 12 months. Rabobank analyst Tim Hunt said: “The easing of international dairy prices from their record peak in April lasted barely eight weeks. Forward pricing on the global dairy trade price index suggests we are amidst a period of high pricing which is unprecedented in terms of its level and duration. “Most likely, the prospect of any significant softening in world prices will be delayed, possibly until the second quarter of 2014.”
By mid-September, dairy prices were up on the opening levels for the quarter, with butter about 10 percent below record levels.
In the EU, milk supply returned to year-on-year growth after 12 months of contraction. And Rabobank said it expects milk production to continue to rise throughout the second half of 2013. The report stated: “The primary driver of the recovery was the weather. After a difficult eight months or so, growing conditions have been exceptional since June. As a result, farmers have been able to generate good amounts of above-average quality silage for this time of year.”
NFU chief dairy adviser Rob Newbery said there was a growing world dairy marketplace and there were opportunities for British farmers. He said: “We have had years of the EU having higher prices than the rest of the world and we have been fearful of the rest of the world. This growth of demand in China and Africa will make the market more open. “The countries which have a head start and those with an agenda will continue to do well.”
Source: Farmers Guardian