The Rabobank report analyzing data collected in the second quarter of 2024 estimates a delayed recovery of global dairy prices, against the backdrop of changes in the Chinese market.

The latest sector analysis by Rabobank indicates a slower-than-expected recovery of global dairy prices, especially as China reduces its dairy imports.

This analysis was detailed in the bank's quarterly report, titled "Global Dairy Quarterly - Searching for Equilibrium."

According to the report, the brief increase in global dairy prices at the end of 2023 and early 2024 was more a result of importers replenishing stocks at lower prices than a strong increase in consumer demand.

The gradual expected increase in milk prices in 2024 was tempered by weaker global demand, coupled with increased domestic milk production in China, which led to reduced import needs.

The report, in collaboration with RaboResearch's lead dairy products analyst Michael Harvey, notes that while China has upwardly adjusted its milk production forecasts for 2024, dairy production in other major exporting regions is expected to see modest growth.

This slow growth is due to low profitability affecting milk herds in regions like the USA and South America, alongside unfavorable weather conditions impacting milk production.

Despite these challenges, Harvey believes that the global dairy market will continue its recovery, aided by limited supply growth.

However, he warns that this recovery will face several obstacles, including mixed signals in global demand recovery and ongoing economic pressures such as inflation and high interest rates affecting consumer spending.

Additionally, the report underscores the influence of increased local milk production and reduced consumer demand in China on global markets. A decline of 8% in net dairy imports from China is estimated for 2024, marking the third consecutive year of decline.

In Australia, milk production has increased across all regions so far this season, with forecasts suggesting further growth. Despite low export volumes, local market conditions are expected to remain favorable.

The report also highlights other factors that could influence the dairy market, including changes in nitrogen derogation limits in Europe and the impact of pathogenic avian influenza in the USA, which could further complicate the global dairy landscape. (Photo: Dreamstime)