Rabobank Report Forecasts Delayed Recovery in Global Dairy Prices Amid Shifts in Chinese Market
Source: The DairyNews
Rabobank's latest sector analysis indicates a slower-than-expected recovery in global dairy prices, particularly as China reduces its dairy imports. This analysis was detailed in the bank's Q2 Global Dairy Quarterly report, titled "Searching for Equilibrium."
According to the report, the brief spike in global dairy prices late in 2023 and early 2024 was more a result of importers' restocking activities at lower prices, rather than a strong increase in consumer demand. The expected gradual rise in milk prices during 2024 has been tempered by softer global demand coupled with an increase in domestic milk production in China, leading to reduced import needs.
The report, co-authored by RaboResearch senior dairy analyst Michael Harvey, notes that while China has adjusted its 2024 milk production forecast upward, dairy production in other major exporting regions is projected to see only modest growth. This slow growth is due to low profitability impacting dairy herds in regions like the US and South America, along with adverse weather conditions affecting milk production.
Despite these challenges, Harvey believes the global dairy market will continue its recovery, aided by limited supply growth. However, he cautions that this recovery will face several hurdles, including mixed signals in global demand recovery and ongoing economic pressures such as inflation and high interest rates, which affect consumer spending.
Furthermore, the report highlights the influence of increased local milk production and dampened consumer demand in China on global markets. It forecasts an 8% decrease in China’s net dairy imports for 2024, a third consecutive year of decline.
In Australia, milk production has increased across all regions to date this season, with forecasts suggesting further growth. Despite weak export volumes, the local market conditions are expected to remain favorable.
The report also points to other factors that could influence the dairy market, including changes to nitrogen derogation limits in Europe and the impact of pathogenic avian flu in the US, which could further complicate the global dairy landscape.
The report, co-authored by RaboResearch senior dairy analyst Michael Harvey, notes that while China has adjusted its 2024 milk production forecast upward, dairy production in other major exporting regions is projected to see only modest growth. This slow growth is due to low profitability impacting dairy herds in regions like the US and South America, along with adverse weather conditions affecting milk production.
Despite these challenges, Harvey believes the global dairy market will continue its recovery, aided by limited supply growth. However, he cautions that this recovery will face several hurdles, including mixed signals in global demand recovery and ongoing economic pressures such as inflation and high interest rates, which affect consumer spending.
Furthermore, the report highlights the influence of increased local milk production and dampened consumer demand in China on global markets. It forecasts an 8% decrease in China’s net dairy imports for 2024, a third consecutive year of decline.
In Australia, milk production has increased across all regions to date this season, with forecasts suggesting further growth. Despite weak export volumes, the local market conditions are expected to remain favorable.
The report also points to other factors that could influence the dairy market, including changes to nitrogen derogation limits in Europe and the impact of pathogenic avian flu in the US, which could further complicate the global dairy landscape.
