U.S. dairy prices are continuing their fall, and it could be a while until they recover. Rabobank Food & Agribusiness Research (FAR) and Advisory Group‘s latest quarterly report shows the trend is global.
The report also finds international dairy markets continue to suffer from low prices, though the rate of decline in the price of dairy commodities has slowed compared to that seen in Q3 2014.
Exceptional milk production growth in export regions in the last nine months has outstripped weak local consumption, boosting supply in the international market and forcing prices to fall. However, low prices have succeeded in clearing huge volumes, with trade growth up 15 percent year on year. While Rabobank believes that there are signs of price stabilization, climbing off the market floor may take some time.
“Low prices were required to help clear a market still dealing with exceptionally strong supply growth, a rising U.S. dollar, a weak economic environment and reduced buying from China and Russia,” says Rabobank analyst Tim Hunt.
The report goes on to say that China’s buy of dairy in the the international market is nearly half of what it was than this time last year. The Russian ban on imports from key suppliers has also pushed global prices down by 30 to 50 percent from peak prices.