Milk prices are poised to fall by 15% by the end of 2014 because of a significant increase in supply in response to high values according to Dean Foods, the biggest dairy processor in the U.S. Prices of benchmark Class I milk increased 38% year on year this month, due to strong global demand particularly from China. However, suppliers appear to be meeting this demand and increasing production. European output so far in 2014 has increased 4%-5% with full year growth expected to be 2%-3%, the biggest gain in five years. New Zealand, the world’s top milk-exporting country is expecting full year production to increase 5%-7% against last year. U.S. cheddar prices are also expected to fall from a record high reached in March. Weak production, a 37% year on year increase in March U.S. cheddar exports, and lower stocks have supported prices, but since the March high markets have moderated 14%-16% with further declines expected.
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