Weaker global dairy markets remain a key theme as 2022 comes to a close, says a new dairy report from Rabobank. After record farmgate prices in many exporting regions this year, milk supply growth has emerged at last, led by the Northern Hemisphere.
However, as demand falters, farmgate milk prices will follow global commodity market trends lower in 2023.
The supply is expected to grow. Emma Higgins, Senior Agriculture Analyst at Rabobank reports, “Rabobank expects milk supply will gain modest momentum in 2023 in most regions apart from Australia, which saw another period of weather-disrupted production in the fourth quarter of 2022. In 2023, milk production from the Big 7 export regions is anticipated to grow by 1% compared to 2022, enough to offset the 0.8% decrease in 2022 and remain on par with 2021’s production.”
The report shows that so far waning confidence levels as disposable incomes is taking a hit. Emerging markets are most at risk due to projected inflationary impacts on consumer budgets in the first half of 2023. “Consumption growth in some export regions is becoming more challenging as consumers juggle significant price increases in the dairy cabinet,” says Higgins.
According to the report, China is likely to re-enter markets in Q2 with a bigger presence from Q3 2023 onward.
The RaboResearch reports are proprietary to Rabobank and Rabo AgriFinance clients. For more information, go to Rabobank.
December 30, 2022