News Milk
Rabobank anticipates another correction for the milk price
Although milk prices have already been significantly reduced, the bottom has probably not yet been reached. In its latest Europe-wide sector forecast, Rabobank foresees a slight correction in the coming months.
De sector forecast is certainly not full of good prospects for the dairy chain. After excellent sentiment and record high prices in 2022, the market is now in a different mood. Milk powders in particular have been significantly depreciated, the bank notes. Cheese prices are more stable. Prices have fallen not only in Europe, but also in other important export regions such as America and New Zealand. According to the bank, prices in Europe are still at a relatively high level from a historical perspective.
Milk production continues to grow
The reduced prices invite lower production. However, the bank believes there will continue to be growth. "The forecast for the most important export regions has been adjusted from 0,5% to 0,3% year-on-year growth. For next year we currently assume a plus of 0,4% compared to 2023," the company writes. Bank. Furthermore, price inflation for dairy products in Europe remains high compared to 2021, although the trend is leveling off. Consumers will therefore probably keep their hands on their purse strings. The bank also points out that the food service purchases more selectively.
In short, the European dairy market currently has two faces. Prices for milk powders are under pressure, while there is still no clear improvement in demand. In contrast, EU prices and spot prices for cheese and butter appear to be fairly stable. This while the peak of European milk volumes is behind us.
Milk price and China
According to the bank, the milk price is reasonably in line with the dairy market, although the bank still expects a small correction. This will also slow down milk production growth in our country, as we already saw in August. A small improvement is forecast in the United States, but this is not sufficient to absorb the margin pressure. In New Zealand, Fonterra's milk price is moving in line with the bank's downward expectations.
Furthermore, the bank is not optimistic about the development of Chinese dairy consumption, due to the weak economic situation. This also affects the sales opportunities of European dairy exporters. Especially because Chinese milk production grew by no less than 7,5% in the first half of this year. In the second half of this year, growth will probably drop to more than 3%.
Wouter Job
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