July 6, 2012 – A slow squeeze is likely to start reducing pressure on U.S. dairy producers through the rest of 2012 with a recovery gaining legs in early 2013. This is a key theme of the latest quarterly dairy report from Rabobank’s Food & Agribusiness Research and Advisory (FAR) group. Though the market experienced a small rally in June, as buyers moved to cover short term needs, U.S. milk prices remained down twenty three percent overall, compared to this time last year. Rabobank Sr. Vice-President and ag ecnomist Vernon Crowder spoke to DairyLine about the report in this podcast.
Producer milk prices in the U.S. have fallen below breakeven levels in 2012 due to a wave of growth in the global milk supply. This substantial global price reduction has led to financial difficulties for producers who have not locked-in their feed purchases, or who do not grow their own feed. In the report, Rabobank outlines the expectation that global supply growth will lose momentum in coming months, as farmers outside the U.S. see a further reduction in milk prices and unusually favorable weather reverts to more consistent patterns.
Demand is expected to remain lackluster in the face of a weak global economy with the recovery being slowed by significant, but not alarming, stocks. As 2012 progresses and the condition of the international market improves, there should be a slow recovery in milk prices for farmers in the US. There is also the prospect of an acceleration of that improvement in early 2013.
A full copy of the report is available to the media upon request.
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About Rabobank International Food & Agribusiness Research and Advisory (FAR)
The Rabobank International Food & Agribusiness Research and Advisory (FAR) group is a global team of more than 80 analysts who monitor and evaluate global market events that affect agriculture worldwide. This international team works to gather key insights into commodity markets; conduct in-depth analysis of the factors that drive sector success (or failure); and look at the megatrends that ultimately influence clients’ capital strategy. These analysts are internationally respected experts in everything from protein to produce, inputs to oilseeds, and their knowledge is shared regularly with Rabo AgriFinance customers Some surprises in the quarterly report from the Food and Agribusiness Advisory