Rabobank expects the negative impact of the corona crisis to keep a grip on the dairy market for the time being. Until the second quarter of 2021, analysts at the bank see no room for recovery.
A new balance between supply and demand will have to be created on the dairy market. That is now missing. Due to the lockdowns in many countries, demand has fallen considerably, Arla, among others, mentioned this last week with an explanation on the milk price for Dec.
After a sharp drop during the first wave this spring, milk prices have recovered in many production regions. This is the case in the Netherlands, but also in neighboring European countries. Milk prices are also not bad in New Zealand and the United States. That is why Rabobank expects that the growing milk production will continue next year, a trend that has been visible in many regions for some time now.
Old normal still far away
Rabobank also expects government measures to help dairy farmers and dairy processors during the corona crisis to fade into the background in 2021. The demand for dairy products will also need time to recover. All the more so because the 'old normal' is still a long way off and the purchasing power of consumers is being affected by the economic downturn caused by corona in many countries.
All of these factors mean that demand is likely to remain weak while supply is increasing. If milk production continues to rise, there is even a threat of global oversupply. Sentiment in the dairy market will remain weak at least until the second quarter of next year, Rabobank forecasts.
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This is in response to it Boerenbusiness article:
[url = https: // www.boerenbusiness.nl/melk/ artikel/10890151/rabobank-warns-voor-overaanbod-melk]Rabobank warns against oversupply of milk [/url]