THE global dairy market is recovering, but just not as quickly as it was expected too.
That's according to agribusiness lender Rabobank.In its Dairy Quarterly report released last week Rabobank said upward pressure on prices started back due to the first contraction in milk supply from export regions since early 2010, however the increasing price trend "failed to regain strong legs''.
"The fact that this contraction failed to generate a stronger rise in prices suggest that consumption was weaker than anticipated and key buyers have accumulated solid forward coverage,'' the report said.
"Milk production growth in key export regions is expected to continue to fall below prior-year levels through the first half of next year.''
Rabobank said current buyer inventories will provide temporary protection from supply shortages, the market will tighten if there is even "modest improvement in demand for imports from the key buying regions, which appears highly likely''.
"The timing and vigour of the market peak has likely been pushed back and softened by a weaker economic outlook than envisaged three months ago,'' the report said.
