GLOBAL – Dairy farmers worldwide may be in for a more favourable year ahead, as Rabobank reports a resurgence in profitability driven by improved production and rising commodity prices, despite concerns over China’s import dynamics and challenges in Argentina’s dairy sector.
The forecast, outlined in Rabobank’s recent report, suggested that dairy farmers could see a return to profitability due to factors such as higher farmgate milk prices, lower input costs, and increased demand for dairy commodities.
In the Big 7 dairy-producing nations, comprising the EU, the US, China, Brazil, Argentina, New Zealand, and Australia, the report noted that milk supply is projected to turn positive in the latter half of 2024.
“While production expansion may take time, signs of positivity are emerging even in regions grappling with adverse conditions.”
In addition, South American, Brazilian dairy farmers are expected to see improved margins fueled by growing consumer demand and favorable production costs.
Similarly, Argentina’s dairy industry shows signs of recovery, with farmgate milk prices aligning with inflation and the potential for production growth from the second quarter of 2024 onward, contingent upon favorable weather conditions.
In the US, butter prices are anticipated to remain elevated, supporting higher farmgate milk prices, although cheese production may increase due to capacity expansion.
Meanwhile, Australia is set to deliver robust milk supply growth, with favorable weather conditions driving production higher.
New Zealand’s production, while slightly lower in volume, has exceeded expectations, setting the stage for a promising start to the new season.
However, concerns persist over China’s economic outlook, which could impact dairy consumption growth.
Additionally, Rabobank foresees an improvement in the supply-demand balance, albeit with weaker margins in the first half of 2025.
In the EU, consumer confidence is rebounding, with prices of dairy products declining, albeit with selective spending patterns among consumers.
Despite this, demand growth is expected to remain modest, contributing to a gradual improvement in farmgate margins.
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