Dairy Demand on the Rise: Rabobank Analysts Predict Positive Outlook
Source: The DairyNews
According to senior agricultural analyst Emma Higgins from Rabobank, there's mounting evidence indicating an upswing in dairy demand. Despite a recent drop in prices at the GlobalDairyTrade (GDT), Higgins highlights six consecutive events with positive price movements, suggesting a favorable trend.
Higgins attributes this optimistic outlook to the diminishing recessionary fears prevalent in many countries throughout 2023. She also points out encouraging developments in China, with retail and food service sales demonstrating strength during the Lunar New Year festivities. Additionally, slowing milk production growth in China is expected to bolster imports in 2024, albeit potentially remaining lower than the long-term average.
The bank's forecast anticipates gradual dairy commodity price gains throughout the year. Rabobank has adjusted its payout forecast for the season by 5 cents to $7.80/kgMS, aligning with Fonterra's forecast mid-point.
However, amidst the positive trajectory, there are noteworthy considerations on the horizon. Higgins highlights upcoming elections in key dairy regions, including European Parliament elections in June and the US presidential election in November. Potential leadership shifts could influence policies such as free trade agreements, sustainability initiatives, or nutrition priorities, consequently impacting dairy prices.
Moreover, the Dutch and Irish dairy sectors face challenges with lower nitrogen derogation limits, reducing application rates of organic nitrogen from animal manure. This could lead to adjustments in herd size or increased costs for manure disposal. Similar concerns extend to Denmark, with its derogation allowance up for renewal in July 2024.
The report also underscores geopolitical conflicts, weather patterns, and feed costs as significant factors to monitor for their potential impact on the dairy sector's outlook.
The bank's forecast anticipates gradual dairy commodity price gains throughout the year. Rabobank has adjusted its payout forecast for the season by 5 cents to $7.80/kgMS, aligning with Fonterra's forecast mid-point.
However, amidst the positive trajectory, there are noteworthy considerations on the horizon. Higgins highlights upcoming elections in key dairy regions, including European Parliament elections in June and the US presidential election in November. Potential leadership shifts could influence policies such as free trade agreements, sustainability initiatives, or nutrition priorities, consequently impacting dairy prices.
Moreover, the Dutch and Irish dairy sectors face challenges with lower nitrogen derogation limits, reducing application rates of organic nitrogen from animal manure. This could lead to adjustments in herd size or increased costs for manure disposal. Similar concerns extend to Denmark, with its derogation allowance up for renewal in July 2024.
The report also underscores geopolitical conflicts, weather patterns, and feed costs as significant factors to monitor for their potential impact on the dairy sector's outlook.
