According to the latest report from Rabobank global dairy prices will remain high at least through the first half of 2014 because of high demand from China. The increased supplies produced by producers since September because of advantageous margins have been continuously bought to meet Chinese demand. By mid-December whole milk powder priced above US$5,000 per ton in fob Oceania trade pushing South American producers to switch to the more profitable whole milk powder. As China buys up global supply, dairy supplies left on the market for other regions such as South East Asia, the Middle East, and Africa are tightening leaving countries struggling to secure enough product. Going into 2014 the dairy market will see prices either at or near record highs before easing in mid-to-late 2014 as soybean and corn have fallen 10%-40% easing feed costs and improving margins for dairy producers. Rabobank expects a still further increase in China’s dairy demand but expects global production to be able to meet it.
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