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Outlook remains positive despite slower than expected dairy price recovery set

Rabobank says the global dairy market may experience a slower price recovery than previously anticipated, particularly as China shows a reduced need for dairy imports.

Despite this, Rabobank said in its Q2 Global Dairy Quarterly, titled Searching for Equilibrium, that the overall market outlook remains positive.

The report says the initial surge in global dairy prices seen in late 2023 and early 2024 was largely due to a period of importers’ restocking at lower prices rather than consumer demand.

Earlier expectations of gradual price increases throughout the year have been tempered by a combination of weaker global demand and increased domestic milk production in China.

These factors suggest global dairy prices may encounter further obstacles on the path to recovery, according to Rabobank.

Report co-author, RaboResearch senior dairy analyst Michael Harvey said while China has seen an upward revision in its milk production forecast for 2024, other key dairy-producing regions are not faring as well. 

“Milk production from the main global export regions will expand only modestly in Q3 before gaining some momentum towards the end of the year,” said Harvey.

Harvey said this subdued global milk supply growth should help underpin a continuation of the dairy market recovery and an improvement in milk prices for dairy producers around the world. 

However, he cautioned that the recovery would not be smooth.


The report said for Australia milk production was higher across all regions and states for the “season to date” (at 5.95 billion litres for June 1, 2023 to February 29, 2024). 

Harvey said key dairying regions across Australia had seen a “mixed autumn break”, with western Victoria and south-east South Australia experiencing dry conditions.

“And while El Nino has ended, the Bureau of Meteorology is predicting below-average rainfall in its near-term outlook,” said Harvey.

Nonetheless, Mr Harvey said, milk production growth will carry momentum into the new season, with Australian dairy farmers generally on a strong footing as the new season approaches.

“Feed availability is adequate following good winter and summer crops and full water storage will also ensure availability of irrigation water,” said Harvey.

The bank forecasts Australian milk production to finish the 2023/24 season 2.9 per cent higher at 8.23 billion litres.

An early look at the 2024/25 season, to commence on June 1, sees the bank forecasting a further one per cent increase in milk production ahead.

The report said Australian dairy exports volumes, however, had remained weak, down six per cent season-to-date, as at the end of February.

Rabobank said in its report that Local Australian milk pricing is set to be “somewhat positive” for the new season with a well-performing domestic market and healthy competition among dairy companies.

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