Chinese demand will keep dairy markets 'well balanced'
A 20pc growth in Chinese imports is expected to keep global dairy markets "well balanced" over the next three months Rabobank analysts have predicted.
However, the bank's quarterly review of the global dairy sector warned that higher than expected production in New Zealand at the end of their production season had "applied the brakes" to the 2016 price recovery.
The analysis also cited the continuing divergence between butter fat and protein prices as a serious drag on dairy markets.
It predicted that EU intervention would again be required to take surplus protein stocks through the summer.
Finding an outlet for the 350,000 tonnes of skim milk powder currently in intervention would also prove challenging, the report stated.
The review forecast that European production this spring would be 1pc back on 2016 levels despite stronger prices.
However, it cautioned that "milk could still flow" in Europe in response to the lift in returns, although cow numbers have fallen in France, Germany and the Netherlands.