News Milk
Rabo foresees lasting tight margins for dairy cattle
The margins in the European and Dutch dairy farming sector will remain tight in the coming months, according to Rabobank. Dairy prices are going up slightly, but so are costs.
Many dairy prices are currently on the rise. But this is happening after many prices for basic dairy products fell in the summer, signals the Rabobank† The bank's analysts, meanwhile, remain cautious. Current dairy prices may have been higher, mainly due to lower than expected supply in recent months, but they don't think there is any prospect of a further sharp price increase. China is mainly responsible for this. It is expected that in the coming months it will purchase almost 20% less on the world dairy market, which will keep global price developments moderate. In addition, an increasing milk production is expected.
Payout prices remain stable
Partly because of this, the payout prices for dairy farming will remain stable in the coming months, according to Rabobank.
Rising production costs (for feed, energy, logistics) and inflation meanwhile mean that margins remain tight at best. That is a problem that also affects American dairy farmers. The US dairy sector is in a similar situation to the European one, with lower than expected supply in recent months and now soaring prices - including on the spot market. But the dairy farmers have not earned much. This despite the so-called 'high basic prices'. Just like in the EU, it is the margin that kills livestock farmers.
Rabobank expects a slightly declining milk production for the Netherlands by the end of this year.
Klaas van der Horst
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