Global dairy prices set to drop

Despite most of the factors underpinning demand remaining, dairy prices are expected to fall during the next few months from the record levels set in August, according to Dutch dairy industry bank Rabobank.

The analysis says demand is likely to soften in the final months of 2007 as consumers face the full brunt of recent price increases in the global market. “The record prices prevailing in August 2007 are likely to prove unsustainable for long…But while a correction is expected, prices are unlikely to return in the medium term to their traditional trading range,” the report says.
Other developments expected to influence consumption and prices are the move into the Southern Hemisphere’s spring, which will bring a seasonal production peak in New Zealand, Australia and Argentina. However, price rises for dairy should curb consumption in areas like China and Indonesia where shoppers have only just begun to acquire a taste for dairy.