“A recovery in global dairy prices is still on the horizon, however burgeoning stocks have pushed out any sustained upturn in the market until the first-half of 2016”, reported Jakob Brand, International Agribusiness Manager of Rabobank during Dutch Dairy Day, which was held on September 17 in Ukraine.

Already this year, the prices of key dairy commodities have fallen 20% to 30% in early 2015. After marginally declining, global milk production from major export regions increased compared to previous years as a result of improved weather and the removal of EU dairy quotas. Despite the ongoing demand weakness from China and the closure of the Russian market, other buyers stepped in to take most of the extra product albeit at weaker prices.

Rabobank says dairy prices are set to rise as milk price reductions in China start to choke off domestic production growth, lower New Zealand production leads to a supply-side adjustment in export regions, the collapse in international commodity prices reduces supply growth from the US and EU and as accelerated dairy consumption growth depletes current accumulated stocks.These factors will work together to tighten the market for "new" milk and a significant price recovery is expected to be underway by mid-2016