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Dairy sector is Waiting for the dust to settle – Rabo Bank Q2 report

“Lockdowns have destroyed dairy demands and created huge imbalances in dairy markets. The heightened retail sales and lower foodservice sales will reach to an equilibrium . However it will take time before returning to normal balance especially in food service sales.

“Government aid and market support will also reduce and, once this occurs, market fundamentals will again take hold.”

Michael Harvey told that expanding global supply and economic recession would further hinder the speed of recovery in dairy markets. We also anticipate much of the world will emerge from the Covid-19 lockdowns into economic recession with slower growth . This would be weighing on domestic demand as well as curbing import demand in many regions.”

“The big-7 dairy regions will show an increase in milk production by 1% in the second half of 2020. These regions comprise of US, EU, Brazil, Argentina, Uruguay, New Zealand & Australia. This increase will happen despite of weather-related issues, lower milk prices and efforts to bring supply back in balance with demand.

China’s dairy imports between January and April were higher than anticipated. However, an overall import demand fall by 15 per cent in 2020 year-on-year is expected.

The world’s largest dairy import market will be more absent in the world market in coming month due to above average inventory levels, sluggish demand and growing domestic production.

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