25 Jun 2015

Rabobank pushes out dairy rebound

7:41 am on 25 June 2015

Rabobank is predicting an upturn in global dairy prices next year but says says farmers will not see a return to sustainable prices before the 2016-2017 season.

In its quarterly dairy report, Rabobank reaffirms a recovery is still on the horizon but has pushed out the timeframe by at least three months.

Rabobank New Zealand and Asia dairy research director Hayley Moynihan said the delay in recovery was largely due to the removal of European Union quotas, which had bolstered supply.

Ms Moynihan said the market was expected to re-balance by early next year, as demand improved and production growth in New Zealand and the United States slowed down.

But she said a return to sustainable prices for New Zealand farmers was not likely to occur before the 2016-2017 production season, because of the timing of the expected market recovery.

"The milk price in New Zealand is averaged on a seasonal basis and therefore the 15-16 season average is still likely to remain low and the impact of prices recovering in early 2016 won't be reflected until the 16-17 season, because of the 12-month averaging of milk prices here."

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