Chinese demand keeps dairy markets tight
Soaring demand from China is set to keep global dairy markets tight over the next six months, according to analyst Rabobank’s latest report.
“The global dairy market tightened considerably in mid-March, and while demand [in the first quarter of the year] remained weak in the EU and USA, importers continued to search for increased quantities, led by a surge in Chinese buying,” it said.
The poor end to the southern hemisphere season would overlap with a subdued start to the northern hemisphere spring supply, meaning total milk production in export regions was set to fall below last year in the first half of 2013.
“This will not be much of a problem in surplus regions, where demand remains weak,” said the report. “Instead, it will reduce availability for the international market. The quest for additional supply should ensure a tight global market through Q2 and Q3, before a new southern hemisphere season.”
Meanwhile, Fonterra, the world’s largest dairy exporter, was likely to enter the Chinese branded infant milk formula market by the middle of year, potentially further reducing export availability in the future.