July 11, 2016


Global milk inventories rise amid glut-Rabobank



Growing milk inventories will continue to overhang the market as the world works its way through the current glut, the Rabobank said in its global dairy report for the second quarter.


The report said global stocks continue to increase, with current stocks estimated to stand at 6.4 million tonnes, or higher than the five-year average in liquid milk equivalent (LME) terms, representing around 7.5% of annual trade.


Rabobank predicts that prices will start to increase in the first quarter of next year, but adds that high levels of stock and weak global demand can threaten this. Despite higher buying from China in the first half of the year, poor economic performance, low oil prices and geopolitics continue to weaken demand in many regions, it said.


In addition, Rabobank continued, the decision of Britain to leave the EU could skew global competition if, as forecast, the euro weakens, increasing the competitiveness of European products in export markets.


"While we still forecast prices to rise in 2017, these risk being dampened by continuing weak demand due to low oil prices, trade bans and lack of affordability in emerging markets," says Kevin Bellamy, Rabobank global strategist for dairy.

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