Rabobank's Report: global dairy market faces transition in 2024
Source: The DairyNews
A recent report from Rabobank highlights the challenges faced by the global dairy market in 2023, characterized by limited milk supply growth and sluggish demand. The document indicates a softening in global dairy commodity pricing due to weakened underlying fundamentals, including lower milk prices, increased costs, and weather disruptions. As 2023 concludes, Rabobank notes a delicate balance in the market with restricted new milk and subdued demand.
Looking ahead to 2024, Rabobank anticipates a transition to the next phase in the dairy market cycle, with prices expected to rise. However, the report emphasizes the market's finely balanced nature, with lingering uncertainty regarding underlying demand for the coming year.
The global milk supply outlook for 2024 has weakened, with sluggish growth projected across major export regions. Despite three consecutive quarters of growth in 2023, the milk supply export engine faced challenges, declining year-on-year by 0.2% in the third quarter. Rabobank's forecast suggests a modest 0.3% growth in overall milk supply for the entire year.
The report also discusses the slow recovery in dairy commodity prices, with farmgate milk prices in export regions expected to close 2023 between 20% to 40% lower than the start of the year. Despite this, some regional milk prices have recently increased, boosting farmgate margins due to a more favorable 2024 feed cost outlook.
Rabobank's senior dairy analyst, Michael Harvey, anticipates a gradual recovery in dairy commodity prices but warns of potential volatility. Factors contributing to this volatility include geopolitical instability risks, volatile energy markets, and weak macroeconomic conditions, all of which will be closely monitored in 2024.
The report identifies demand uncertainty as a key factor in the coming year, with high dairy inflation, broader cost-of-living issues, and weak consumer confidence on the horizon. While peak food and dairy inflation have passed, Rabobank acknowledges ongoing market uncertainty and the impact of rising unemployment on purchasing power in 2024, particularly affecting emerging markets and low-income households.
In China, where consumer prices are falling and overall consumption growth is sluggish, Rabobank expects China's import appetite for dairy commodities to drive any Oceania commodity price rally in 2024. The report suggests that China's import volume may flatline in 2024, providing an opportunity for importers outside of China to build stocks.
Other factors highlighted for consideration in 2024 include a mildly softer grain and oilseed price outlook, El Niño and weather-related risks, mixed livestock markets in export regions, and the potential impact of global events like the Israel-Hamas war.
While Rabobank envisions a slow recovery in commodity prices back to long-term averages, the report underscores the perfect conditions for potential price volatility and market uncertainties in 2024, influenced by geopolitical factors, energy markets, and macroeconomic conditions.
The global milk supply outlook for 2024 has weakened, with sluggish growth projected across major export regions. Despite three consecutive quarters of growth in 2023, the milk supply export engine faced challenges, declining year-on-year by 0.2% in the third quarter. Rabobank's forecast suggests a modest 0.3% growth in overall milk supply for the entire year.
The report also discusses the slow recovery in dairy commodity prices, with farmgate milk prices in export regions expected to close 2023 between 20% to 40% lower than the start of the year. Despite this, some regional milk prices have recently increased, boosting farmgate margins due to a more favorable 2024 feed cost outlook.
Rabobank's senior dairy analyst, Michael Harvey, anticipates a gradual recovery in dairy commodity prices but warns of potential volatility. Factors contributing to this volatility include geopolitical instability risks, volatile energy markets, and weak macroeconomic conditions, all of which will be closely monitored in 2024.
The report identifies demand uncertainty as a key factor in the coming year, with high dairy inflation, broader cost-of-living issues, and weak consumer confidence on the horizon. While peak food and dairy inflation have passed, Rabobank acknowledges ongoing market uncertainty and the impact of rising unemployment on purchasing power in 2024, particularly affecting emerging markets and low-income households.
In China, where consumer prices are falling and overall consumption growth is sluggish, Rabobank expects China's import appetite for dairy commodities to drive any Oceania commodity price rally in 2024. The report suggests that China's import volume may flatline in 2024, providing an opportunity for importers outside of China to build stocks.
Other factors highlighted for consideration in 2024 include a mildly softer grain and oilseed price outlook, El Niño and weather-related risks, mixed livestock markets in export regions, and the potential impact of global events like the Israel-Hamas war.
While Rabobank envisions a slow recovery in commodity prices back to long-term averages, the report underscores the perfect conditions for potential price volatility and market uncertainties in 2024, influenced by geopolitical factors, energy markets, and macroeconomic conditions.
