Rabobank: “Milk price recovery unlikely until late 2015 at best”

The latest Rabobank Dairy Quarterly report says that the world is still producing more milk than the market currently needs. This imbalance is unlikely to be substantially corrected in second half 2015, it says. “The seeds of an eventual price recovery are now being planted, with producers and consumers finally getting the signal that the world has too much milk and is starting to respond to that.”

But the price recovery itself is unlikely to emerge till late 2015 at best, ensuring a difficult period for many of the world’s producers. The Rabobank report says that the sharp rally in international dairy prices in the first quarter was reversed in the second quarter, with prices falling 20-30% in the three months to mid-June. While market fundamentals never appeared to support the first quarter rally, fundamentals also deteriorated through second quarter, it says.

After falling marginally in the first quarter, production in key export regions again rose above prior years in April as weather improved and EU quotas were removed, enabling producers to respond to what remained profitable prices in many regions, it says.