January 8, 2018
Exportable dairy surpluses to pressure global markets
Exportable dairy surpluses across the export regions has gained momentum, but the growth comes with challenges, according to the fourth-quarter 2017 RaboResearch report.
The report, released by the agricultural lender Rabobank and entitled "Dairy Quarterly Q4 2017: Rising Tide of Milk Weighs on Sentiment", said the growth in milk supply turned positive in the second quarter of 2017 and accelerated in the third quarter.
"Growth in the global exportable dairy surpluses will continue to expand in the coming period, pressuring global markets", Harvey said.
However, the growth in the exportable surpluses "has not come without its challenges," said Michael Harvey, senior analyst - dairy at Rabobank. For example, he said, the Oceania spring peak has stumbled due to unfavourable weather conditions.
Rabobank said it does not expect exportable surpluses to completely overwhelm global markets-helped by strategies to limit supply growth from processors.
Waning global market sentiment was noted in the third quarter of 2017, with geopolitical tensions and dairy policy uncertainty contributing to this sentiment.
"Attention is now squarely fixed on production trends in Europe in the coming six months. Growth in production is expanding, but milk price signals and efforts to curb production loom as disruptors", said the report.
It said a tinkering of the intervention scheme next season may see an increase in milk diverted to cheese and whole milk powder production in Europe.