The final three months of New Zealand's dairy season are
expected to see milk production at least 20% to 30% higher
than last year's drought-impacted finale.
While export volumes could be expected to taper off through
season-end, shipments were likely to continue to trend at
least 10% above the previous year because of higher milk
flows, Rabobank's latest dairy quarterly said.
The bank expected an easing of global milk prices from the
mid to late second quarter.
ASB economists were expecting the basket of New Zealand dairy
prices to average about 15% lower next season, compared with
the current season average.
The Rabobank report said a stronger northern hemisphere
production season, on the back of an exceptional season in
the southern hemisphere, should generate more than enough
exportable supply to exceed China's ''extraordinary''
additional needs from the world market.
The ''most crucial'' demand-side question was whether China
would sustain the frenetic buying that had been seen on the
international market throughout the past 12 months, Rabobank
analyst Tim Hunt said.
In the EU, Rabobank expected production to rise by 4% year on
year for the first half of 2014, fuelling a surge in exports.
Fractional growth in the second half of the year would be
boosted in first-half 2015 when current quotas were
eliminated and the EU would likely make a substantial
contribution to boosting international supply.
The US domestic market was expected to show only modest
growth over 2014, as slow economic growth and reductions in
SNAP (Supplemental Nutrition Assistance Programme) payments
were compounded by further increases in retail pricing.
In Australia, improved seasonal conditions and increased
farm-gate prices for southern producers saw a recent marginal
rise in milk flows. Rabobank expected a further recovery in
milk flows in the first half of this year, on the back of
better weather and higher milk prices.