Global dairy quarterly report from Rabobank Q1 2011
Trend and outlook for the international dairy market, March 2011.
Dairy commodity prices have generally risen in the first quarter of 2011, but increasing grain prices and the recent events in Japan have started to push prices down.
International dairy commodity prices rose sharply through most of Q1 2011, before a sudden contraction wiped off around half the gains in mid-March.
Pricing appears to have been initially squeezed up by improving demand, a poor Southern Hemisphere summer and a series of supply shocks in importing regions, before the devastating events in Japan rocked market sentiment, slashed grains futures, and sent dairy prices downwards.
Assuming the Japanese nuclear crisis is brought under control, we expect that the net impact of the earthquake and tsunami will prove relatively limited for dairy.
Much will depend on this, with other factors pointing to continued market tightness through Q2 2011, backed by improving consumption, ongoing shortages in key import regions and our expectations of a rebound in grain costs.
Thus while sentiment may play a dominant role in setting market direction in coming weeks, Rabobank expects market fundamentals will reassert themselves and continue to sustain international prices at close to the levels evident in mid-March as we progress through Q2.
Read the full report here