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Could it be 2017 before dairy markets recover?

The US Dairy Export Council says it could be another 12 months before supply and demand meet


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Supply and demand have been out of balance in global dairy markets this year, USDEC said
Supply and demand have been out of balance in global dairy markets this year, USDEC said

There may be little recovery in dairy markets for the whole of next year, the US Dairy Export Council (USDEC) has said.

 

This year the global dairy trade has been consistently depressed with increasing supply meeting weak global demand. This has led to sustained farmgate price falls at UK level.

 

USDEC said the pendulum which swings between supply and demand had swung ’way too high’ on the supply side, and it was unclear when balance would be restored.

 

Marc Beck, USDEC executive vice president said: “What we have today is most likely what we will have for 2016, a market looking for equilibrium, an equilibrium which is sustainable for the entire supply chain.

 

"It may be 2017 before we return to a scenario where supply and demand are more closely aligned."

 

USDEC noted the world’s top five global dairy suppliers grew output nearly two per cent annually over the past five years and contrasted this with falling demand in China and Russia, which it said was 10 per cent of global dairy trade.

 

The body claimed while production was slowing, suppliers were still operating at 2014 levels and claimed this import demand no longer existed.

 

Mr Beck added: "Inventory is really going to play a big role in 2016. Even when supply syncs with demand, heavy inventories hanging over the market will delay a true market rebalancing.

 

"New Zealand farmers have pulled back, and U.S. and Australian output is flattening. But we still need to see EU supply retract, and that is not likely to happen until the second quarter of 2016."


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