Global dairy prices move upwards

Agricultural banking concern Rabobank and Fonterra chief executive Andrew Ferrier agree that dairy prices are moving upwards worldwide. A recent report from Rabobank has noted that the upwards trend is due to strong demand and some supply limitations. “International dairy commodity prices have continued to firm into the New Year. Prices sit comfortably above trading levels at the beginning of 2010,” the report states.
Meanwhile, Ferrier told Bloomberg Business news recently that high milk prices are “the new normal” and increased global commodity demand, led by emerging markets, is set to boost them further. He further predicts that whole-milk powder prices will likely remain at least 50% above their historical averages in the longer term.
In the US, milk production has been tracking above previous year levels since early 2010, according to Rabobank: “However, surging feed costs started to slow the growth towards the end of the year. Strong demand from world markets has lifted domestic wholesale prices, which is expected to result in significant improvement in milk prices in coming months and should see positive margins return for us dairy farmers in the second quarter of 2011.”
China and Russia continue to be strong importers on the global dairy market, the bank says. “It is Rabobank’s expectation that China will continue to expand on already exceptionally high import levels in 2011.”
New Zealand and Australia have been good news/bad news, says the report. Optimism is building for solid opening prices for the 2011/2012 season for export areas in Australia, but a recent price war for drinking milk in supermarkets will cause anxiety in fresh milk areas. In New Zealand, dairy export volumes increased by three per cent in December, with WMP showing the biggest increase as more than 50,000 tonnes went to China alone.
For further information, please visit www.rabobank.com