Oil Prices, Geopolitics Affect Global Dairy Market

The world continues to work its way through the current glut of milk on the market, which is among factors influencing a lackluster quarterly dairy report from Rabobank.

In the second quarter, the world’s farmers began to react to lower farmgate prices by slowing growth in production, which caused reductions in export surpluses. Despite higher buying from China in the first half of the year, poor economic performance, low oil prices and geopolitics continued to weaken demand.

“While we still forecast prices to rise in 2017,” said global dairy sector strategist Kevin Bellamy, the forecast is “risk(s) being dampened by continuing weak demand due to low oil prices, trade bans and lack of affordability in emerging markets. As a result, the light at the end of the tunnel remains undimmed.”

Source: Rabobank