Dairy price recovery expected in 2015 but recent jump could be a false start

Published 17 March 15

Gradual recovery in the dairy markets is expected in 2015 but not until the second half of the year, according to the latest Rabobank report. The recent upturn in wholesale prices appears stronger than the current market conditions would suggest, as buyers have not fully come back to the market and supply, although weakening, is still high compared to previous years. Therefore prices could fall again in the short term, largely depending on the strength of the EU’s spring flush.

However, weak prices are already impacting production in key exporting regions. If this continues it will assist in tightening supply and could set the stage for a more sustained recovery, currently expected in the second half of 2015. The main factors that could negatively affect this include stronger than anticipated EU production after quotas are lifted, ideal weather conditions and weaker than expected dairy import demand.