Rabobank cools global milk price recovery projections

Rabobank's global dairy quarterly report for Q1 2024 forecasts a slower-than-expected recovery of market prices, attributing recent price increases to lower prices and restocking rather than improved consumer demand. Milk supply growth is expected to remain modest, with Europe and New Zealand showing slight growth in milk production in the latter half of the year, while South American producers may benefit from lower feed prices and increasing farmgate milk prices. However, high inflation and interest rates are impacting consumer spending and purchasing power. Global demand for cheese and butter remains strong, while skim milk powder exports are underperforming, particularly in the EU. Despite concerns over bird flu in the US dairy herd, its impact on milk production and demand has been limited so far. Sustained uncertainty about when interest rates will be cut could benefit farmers and dairy processors in the short term, and US dairy product exports have improved, led by cheese, nonfat dry milk, and whey powder.