Global Dairy Market Trends: Q1 2024 Sees Path to Equilibrium
The global dairy market is poised for slow but steady commodity price gains in the first quarter of 2024, signaling a potential return to profitability for farmers worldwide. While it may not be a record-breaking year, the outlook suggests an improvement in margins, buoyed by lower feed costs and increased milk production anticipated in the second half of the year across the Big 7 dairy-producing regions.
Despite the positive trajectory, challenges persist for farmers as margin pressures linger into the new year. Dairy product price forecasts indicate a more promising year ahead after the difficulties faced in 2023, offering much-needed relief at the farmgate level.
However, milk supply growth remains subdued, with a gradual return to production expansion expected over time. Rabobank forecasts a decrease in year-over-year output for the first half of 2024, with a turnaround expected in the latter half, supported by favorable comparables. While global demand has been sluggish in recent months, indications suggest a potential upswing on the horizon. Receding recessionary fears in some countries and modestly improved global economic growth contribute to a cautiously optimistic outlook.
Nevertheless, the low levels of global dairy product stocks pose a risk, as any supply shock or demand event could lead to upward price pressure for dairy product end-users. As the industry strives to find a new equilibrium, stakeholders remain vigilant in navigating the evolving market landscape.
However, milk supply growth remains subdued, with a gradual return to production expansion expected over time. Rabobank forecasts a decrease in year-over-year output for the first half of 2024, with a turnaround expected in the latter half, supported by favorable comparables. While global demand has been sluggish in recent months, indications suggest a potential upswing on the horizon. Receding recessionary fears in some countries and modestly improved global economic growth contribute to a cautiously optimistic outlook.
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