Global milk prices are likely to ease in the coming months as production increases, according to the latest report from analyst Rabobank.

“A strong northern hemisphere production season on the back of an exceptional season in the southern hemisphere should generate more than enough exportable supply to exceed China’s extraordinary needs, loosening the market somewhat,” it said.

“However, the rate of price reduction will be limited by structural constraints on suppliers, the need to replenish depleted buyer inventories and ongoing demand growth in line with a slow economic recovery.”

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EU milk production was likely to increase by 4% year on year in the first half of 2014, fuelling a surge in exports, said the report. And the elimination of quotas in early 2015 would likely see the EU making a substantial contribution to boosting international supply.

GB milk production continues to outpace 10-year highs, with wholesale deliveries in February reaching 923bn litres, 12% above last year and the highest February total since 2003-04, said a DairyCo report. This had continued into March with GB deliveries averaging 34m litres a day in the two weeks to 15 March – 12.7% higher than last year.