According to the bank’s Q3 Global Dairy Quarterly, lower milk prices in most main global dairy-producing countries have started to result in decreased supply in recent months.
“However, in our opinion, a possible whiplash effect is becoming more likely,” said Lucas Fuess, senior dairy analyst at Rabobank in the United States.
“We may see a resurgence in demand emerging months before global milk output can recover,” he warned.
According to the data, milk output in Australia increased in May, marking the first month-on-month increase since mid-2021.
Growth continued in June, growing by 1.2%, bringing national output for the 2022-23 season to 8.129 billion litres, a 5% decrease year on year.
Rabobank forecasts a 2% increase in milk output in the 2023-24 season, owing to good on-farm profit margins and generally abundant feed and irrigation water availability.
According to the analysis, price signals for Australian dairy farmers are highly encouraging against a difficult global background, but larger price moves are unlikely until local and export market circumstances improve dramatically.
In 2022-23, Australian dairy export volumes fell. Total export volumes were down 15% for the season (up to May), with significant tonnage losses in skim milk powder (SMP), cheese, and liquid milk.
According to Rabobank, Australia’s exportable surplus will stabilize in 2023-24 owing to a modest milk pool recovery and slow domestic demand growth.
Rabobank has reduced its worldwide milk production prediction for 2023.
According to the analysis, milk production in the ‘Big 7’ export areas — New Zealand, Australia, the European Union, the United States, Uruguay, Brazil, and Argentina — is expected to increase by 0.3% year on year in 2023.
This decrease from the previous quarter’s forecast of 0.5% is due to output cuts in most significant worldwide areas, including the United States, the European Union, and New Zealand.
Global dairy production is anticipated to rise by 0.4% by 2024, significantly less than the 1.6% annual average increase witnessed from 2010 to 2020.
According to the research, attention is also focused on both supply and demand in China, where the severity of economic headwinds and the length of the halt in economic development are lowering the chances of a robust demand rebound.
Leading dairy processors indicate some market recovery, but this has yet to balance robust Chinese domestic milk production increase, according to Rabobank.
Milk production growth in the nation will decline in the second half of 2023 and early 2024, but no significant market rebalancing is predicted in the short future, and positive year-on-year imports are not forecast until late 2024 or early 2025.
