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World dairy prices to remain under pressure until 2017

Staff writer |
Rabobank says that global dairy commodity U.S. dollar prices have continued to stumble along a market floor largely determined by the level of EU intervention support.

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Milk production has continued to slow in the EU and New Zealand as prices remain low.

The report goes on to say that throughout 2016, slowing production growth will be matched by slow, but steady consumption growth in most main export regions.

Meanwhile, in Europe, Rabobank anticipates that low farmgate prices will mean production growth will slow as farmers focus more on cost-saving than expansion.

However, the dairy quarterly report found that while European production growth will moderate, production levels will not fall, requiring the world market to find a new pricing balance.

Down under, the 2015/2016 season production in New Zealand will be higher than expected, which Rabobank attributes to increased summer rainfall.

In the U.S., it is expected that farmgate prices are likely to move down in response to weakening trade balance and growth in inventories.

Worse-than-expected production in the second half of 2015 has led Rabobank to cut its China production forecast for 2016.

Contracting production levels are to continue in Argentina and Brazil, as very high feed costs keep farmers’ margins under intense pressure.


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