Tighter Supplies Driving Up Milk Prices Worldwide
By Amanda Brodhagen, Farms.com
Rabobank released a new report - Q3 2012 which examined the global dairy industry looking at supply and demand of key markets. The report finds that global dairy markets are heading into a period of supply scarcity for 2013. The report identified several key factors driving this new development including, low milk prices, high feed costs and extreme weather conditions all being contributors to lower production.
“We fear that much of the market has been lulled into a false sense of security by the phenomenal growth seasons we saw in late 2011 and early 2012 – with the next 12 months likely providing a rude awakening,” the report stated.
Rabobank projects a reduction in exportable surpluses coming from the “Big Seven” export regions – EU, U.S., Australia, New Zealand, Brazil, Argentina and Uruguay to the end of 2012 and first half of 2013. The report concludes that as economies such as China, Southeast Asia, and Middle Eastern/North African countries improve, the demand to buy more dairy will rise.
“The bright light for dairy producers and a fulcrum for recent price recovery on world markets has been the ongoing strength of import demand, and we expect import demand to continue to expand in the coming six months.”