Rabobank flags rising global dairy prices, warns of downside risks ahead
While global dairy commodity prices continue to climb in most key exporting countries, the second half of the year is expected to bring increased downside risks.
Rabobank has lifted its forecast milk price for this season by 45c to $7.60/kgMS.
The bank, in its latest Dairy Quarterly report, says farmgate milk cheques are improving in most of the world’s major dairy-producing regions.
Report author, Rabobank dairy analyst Emma Higgins says increased global dairy prices were largely a result of reduced global stocks of skim milk powder (SMP) and modest milk production growth.
“The global market has picked up for SMP now that EU intervention stocks are a thing of the past and we’ve seen prices for SMP shoot upwards in the latest price rally,” she says.
Robust global prices are also being supported by tepid milk growth, with this forecast to continue into next year. Across the Big 7 - the EU, the US, New Zealand, Australia, Uruguay, Argentina & Brazil – milk supply growth is expected to remain at, or below, 1% in 2020.
Higgins says despite strong global milk price signals, a low global supply growth rate was anticipated due to a combination of demand and supply factors holding back production increases.
“Dairy producers around the world have spent the last several years waiting for a return to price levels similar to those seen in 2014, however, now that we are approaching that territory, there is anxiety over the ability of consumers to withstand price increases, with much of the world either recovering from, in the midst of, or on the verge of some degree of recession,” she says.
“In addition to demand-related concerns, farmers in key milk-producing regions continue to face constraints limiting their ability to expand supply, with environmental regulation and adverse weather conditions among the key factors restricting production increases.”
Higgins says adverse weather had played a role in New Zealand’s lower milk production in the season-to-date, but that this reduced supply had helped contribute to strong pricing for New Zealand product.
“In light of the strong demand – particularly out of China – that has seen Oceaniacommodity prices increase since our last quarterly report Fonterra has twice revised up its forecast range for the 2019/20 season.
“And this has fed into the bank’s upward revision to its own full-year forecast from $7.15/kgMS to $7.60/kgMS for the 2019-20 dairy season,” she says.
Boutique Waikato cheese producer Meyer Cheese is investing in a new $3.5 million facility, designed to boost capacity and enhance the company's sustainability credentials.
OPINION: The Government's decision to rule out changes to Fringe Benefit Tax (FBT) that would cost every farmer thousands of dollars annually, is sensible.
Compensation assistance for farmers impacted by Mycoplama bovis is being wound up.
Selecting the reverse gear quicker than a lovestruck boyfriend who has met the in-laws for the first time, the Coalition Government has confirmed that the proposal to amend Fringe Benefit Tax (FBT) charged against farm utes has been canned.
Holstein Friesian excellence was front and centre at the 2025 Holstein Friesian NZ (HFNZ) Awards, held recently in Invercargill.
The work Fonterra has done with Ballance Agri-Nutrients Ltd, LIC and Ravensdown to save farmers time through better data connections has been recognised with a national award.
OPINION: Years of floods and low food prices have driven a dairy farm in England's northeast to stop milking its…
OPINION: An animal activist organisation is calling for an investigation into the use of dairy cows in sexuallly explicit content…