Rising demand will soak up dairy growth

DESPITE dairy market uncertainty, the general consensus points to increased product supply being absorbed by improving demand up to mid-year, according to Rabobank — which should keep prices paid to farmers at a reasonable level.

Analysts at the global bank, which is deeply involved in the food industry, say attractive milk prices in the EU and the US have boosted production, and Argentinean supplies recovered 5% from the drought of recent years.

For the next quarter, Rabobank believes output will increase further from the principal exporting regions, but at a slower rate due to rising feed costs on farms. Increasing demand is predicted to soak up any increase in supply. The demand is expected to stem from improvement in the US and EU economies, robust demand for imports from the BRIC region, and lower import tariffs in Taiwan and Sri Lanka.