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Global Dairy Demand Expected to Remain Tight

Rabobank Releases Its Global Dairy Industry Q1 2013 Report

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The global dairy market is expected to remain tight over the next six months as demand continues to surge, especially in the Chinese market, according to a new six-page report released by Rabobank.

The report notes that lower milk production shouldn’t be a problem in surplus regions, where the demand is typically weak. Rabobank believes that this will reduce the availability for the international market. Additionally, while the Chinese buying will likely slow in the coming months, buyers from other regions will be looking to supply their local markets.

“The quest for additional supply should ensure a tight global market environment through Q2 and Q3 2013, before a new Southern Hemisphere season and an easing of global feed prices enables the market to balance at somewhat lower prices in Q4,” said Tim Hunt, Rabobank global dairy strategist.

The report is bearish for the EU and U.S. consumption. However, if one of these two markets happens to outperform the other, it will mean fewer products will be available for export.

Rabobank analysis also predicts that the Northern Hemisphere will likely experience a better crop year, which will inevitably drive down feed input cots. However, if this prediction doesn’t hold true, another poor crop year will lead to more market upside.

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