Dairy traders getting nervous

Declan O'Brien

Declan O'Brien

There were mixed messages on the immediate outlook for the dairy sector this week.

While Rabobank said demand for dairy stocks remained steady, markets were reported to be quiet with a definite fall-off in trade.

Last week, the Dutch market price for whole milk powder and skim milk powder fell by €70/t and €150/t respectively, with the demand for produce said to be decidedly quieter.

The milk market was also quieter in Northern Ireland, with the price of quota back stg3.2p/l to 26.66p/l. A definite turn in the market was not being forecast but observers described it as "nervous".

One source said traders appeared to be standing back and testing the market, in the knowledge that milk supplies on the European market were expected to increase significantly this summer.

However, the latest quarterly report published by Rabobank shows global dairy demand tracking some slight increase in supplies during the latest quarterly period.

Quoting the Rabobank report, Peter Duggan of Bord Bia said that while some uncertainty surrounded the next quarter, the general consensus pointed to increased supplies being absorbed by improving demand conditions.

Other factors that will determine demand growth will be the impact of the unrest in Libya and the increasing concerns surrounding nuclear meltdowns in Japan, which is a top five global dairy importer.

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