Russia ban to hit dairy worst
This week, EU foreign ministers extended broad economic sanctions on Russia until the end of January 2016, dashing hopes that food exports to Russia would resume in August after a 12-month ban.
Instead, Russia may add new products to the list of banned goods, which already included fruit, vegetables, meats, and dairy products.
The ban has hit 43%, or €5.1bn, of the EU’s food exports. The EU has already spent hundreds of millions of euro to help the farmers and exporters affected by the closure of Russian borders to their goods.
The Russian ban will exacerbate a global dairy trade slump which is expected to last well into 2016, according to experts at Rabobank, the leading global agri-bank.
The breakdown in relations with Russia is the main factor behind falling EU dairy exports, with shipments down 17% for cheese, 5% for butter, and 5% for milk powders.
Meanwhile, continuing oversupply, relative to market needs, has affected Rabobank’s dairy market expectations.
Price will stay “extremely low” for now, according to the bank, which has reversed its earlier prediction of some market recovery by September.
Instead, a “deterioration” in market fundamentals had scuppered prospects for a recovery this year, according to Rabobank’s quarterly dairy outlook bulletin.
The bank now forecasts that the “first half of 2016 will bring improved prospects for the commencement of a meaningful price recovery”.
The market was likely to see “stronger upward momentum” in the second quarter of 2016, as stocks return to “more normal” levels.
