Rabobank: tighter supply and higher dairy prices

The global dairy market is heading for a new period of scarcity, with tighter milk supplies driving up prices across the world, says a new outlook report from global bank Rabobank.

Falling milk production in both the USA and EU has driven local wholesale prices up rapidly in the past three months, but market price recovery in Australia and New Zealand was slower, said the report.

“Milk production growth in key export regions will slow to a trickle over the next 12 months, as farmers respond to low milk prices, high feed costs and pockets of unfavourable weather.”

However, there is also caution in the report for producers. Rabobank expects a modest increase in imports by key buying regions over the next 12 months, with prices rising substantially, but then demand reducing in response to higher prices and the market becoming more balanced.

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