GLOBAL – Milk prices will ease slightly through the early summer, says a new report from Rabobank.
Higher margins and falling feed costs caused a supply lift last year which Rabobank’s Food and Agribusiness research division expects to continue through the second quarter of 2014.
An ‘exceptional’ Southern Hemisphere year overall is to be followed by a strong northern season. Enough even to exceed China’s immense demand.
While the market will be ‘looser’, Rabobank says a desperate need to replenish depleted inventories will limit a price slump.
According to Rabobank analyst Tim Hunt, the main question mark hangs over China sustaining ‘the frenetic buying we have seen on the international market throughout the last 12 months.’
Rabobank expects production to rise by an impressive 4 per cent year-over-year for the first half of 2014, fuelling a surge in exports. Fractional growth in the second half of 2014 will be boosted in the first half of 2015 when current quotas are eliminated and the EU will likely make a substantial contribution to boosting international supply.
The U.S. domestic market is only expected to show modest growth over 2014, as slow economic growth and reductions in SNAP payments are compounded by further increases in retail pricing. But improved supply momentum should see exports grow strongly in the first half of 2014.
• New Zealand
Rabobank expects the final three months of the New Zealand season (until to May 2014) to see production that is at least 20 per cent to 30 per cent higher than the drought-impacted finish of the 2013 season. While export volumes can be expected to taper off through season end, shipments are likely to continue to trend at least 10 per cent above the previous year due to higher milk flows.
Improved seasonal conditions and increased farm gate prices for Southern producers saw a recent rise in milk flow, albeit marginal. Rabobank expects a further recovery in milk flows in the first half of 2014, on the back of better weather and higher milk prices. A small exportable surplus can also be expected on the back of a 2 per cent year-over-year production increase.
A drought in the Southeast, coupled with weak local demand growth is expected to slow Brazilian supply growth, simultaneously reducing import activity as supply expands faster than local demand.
TheCattleSite News Desk