Rabobank says dairy prices will decline
The latest quarterly global dairy outlook from Rabobank says prices softened considerably during the second quarter of the year. Increasing milk production in exporting regions combined with an easing of forward purchasing by China causing the decline. The report says after a period of aggressive buying, China has increased domestic production while sales have weakened causing excess inventories of dairy products.
Rabobank notes that U.S. milk prices have remained “at a significant premium to the world market” through mid-June but are expected to “fall faster than elsewhere’ in the second half of the year as exports decline and milk production increases.
The outlook calls for milk production growth to slow considerably in the second half of this year as lower prices are passed on to producers. However, global consumption will slowly increase thanks to higher incomes, employment growth and falling retail prices. That improving demand will lead to an upswing in prices by the end of 2014 or early 2015.
A look at production around the world:
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