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Rabobank cools international milk value restoration projections

In its latest global dairy quarterly report, Rabobank predicted that the recovery of market prices ‘will be slower than anticipated’ in its Q1 2024 report. The bank has attributed the price increases of late 2023 and early 2024 to overall lower prices and restocking, rather than improvement in consumer demand. Meanwhile, purchasing has slowed as

Rabobank cools international milk value restoration projections

In its newest international dairy quarterly report, Rabobank predicted that the restoration of market costs ‘will likely be slower than anticipated’ in its Q1 2024 report. The financial institution has attributed the value will increase of late 2023 and early 2024 to general decrease costs and restocking, reasonably than enchancment in client demand. In the meantime, buying has slowed as consumers await the seasonal peak in milk manufacturing within the Northern Hemisphere.

Milk provide development remained subdued in line with the evaluation, with manufacturing tipped to develop modestly in Q3 and extra so in This fall. “For Europe, we count on year-on-year development of simply 0.2% in Q3 and 1% in This fall,” the financial institution said. “With farmgate margins within the US larger than weaker year-on-year comparable figures, milk per cow will possible present enchancment in H2 2024.”

Equally, New Zealand is tipped to provide ‘reasonably stronger’ development within the second half of the 12 months if the climate permits it, whereas South America producers, having seen the again of El Nino can hope for larger margins due to decrease feed costs and rising farmgate milk costs.

With inflation nonetheless excessive in most nations, rates of interest are placing strain on debt and client spending, which in flip is affecting buying energy, the financial institution said.

In Europe, the financial institution expects flat demand this 12 months however ideas US shoppers to extend buying on account of decrease dairy costs in that market. The US dairy product CPI was 1.6% decrease 12 months on 12 months, declining for the seventh month in a row in March – the primary time this had occurred since 2016.

Rabobank added that it had not seen proof of a major market response to the outbreak of chicken flu within the US dairy herd since March. “Many questions stay in regards to the general unfold and severity of the virus, however so far, the impression on milk manufacturing and dairy product demand has been restricted,” mentioned the financial institution.

Lack of rate of interest cuts could possibly be excellent news for farmers

Whereas sustained uncertainty round when rates of interest will likely be reduce is placing strain on client spending in some markets, farmers and dairy processors might be able to profit from improved credit score affordability within the brief time period, the financial institution said.

World demand for cheese and butter has remained sturdy in line with the report, although skim milk powder exports proceed to underperform, possible on account of decrease demand from China.

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Within the EU, exports fell 4.7% in February year-on-year on the again of stronger home costs, decrease shares and better comparable figures, the financial institution said. SMP exports additionally declined 10.1% on 2023.

Within the US, exports improved in February for the primary time since January 2023. This was led by cheese, nonfat dry milk and whey powder, with aggressive pricing in Q1 supporting record-high month-to-month quantity of cheese shipments on a day by day common foundation. Nonfat dry milk exports additionally rose 3.4% propped up by demand from Southeast Asia. Rabobank predicts complete US shipments will pattern near prior-year ranges throughout 2024 however stay decrease than 2022’s record-setting volumes.

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