After eight weeks in decline, international dairy commodity prices rallied in August and early September, driven largely by demand side developments, says Rabobank in its September 2010 Agribusiness Review.
In its monthly look at world commodities and markets, the international bank notes that global dairy prices have rallied in recent trade auctions, as demand has improved despite ongoing milk supply growth in the Northern Hemisphere. There has been a strong start to Southern Hemisphere production, with good conditions in both Australia and New Zealand.
“Anecdotal evidence suggests that buyers held off as long as they could to take advantage of falling prices, and have now come back into the market with increased force,” the report says.
Russia, the world’s largest dairy importer in 2009, also appears to have entered the market with renewed vigor in recent weeks, as drought conditions impact local milk production and leave processors short of product.
“These shifts appear to have more than offset any increased buyer comfort afforded by ongoing milk supply growth in the Northern Hemisphere and a promising start to the Southern Hemisphere season,” says Rabobank.
With export supply availability expected to remain solid through the coming months, and the temporary boost of buyers re-entering the market after a period of strategic absence likely to pass, Rabobank says sellers will be hoping that Russian buying proves enduring and that the global economic recovery stays on track to underpin recent price gains.