Other than in Brazil, which is gripped by the worst recession in a generation, consumption was expected to continue to grow in Asia, as well as the United States and EU.
In China, low world prices had increased the differential between domestically produced milk and global supplies.
Investment in new farm capacity had been largely suspended and, with stocks continuing to deplete, demand had been inflated by low prices.
When faced with a new New Zealand tariff quota in January and rock-bottom low prices on the world market, Chinese buyers jumped at the chance to buy. As a result, purchases fell only a ‘‘tiny bit short'' of the record January purchases seen in 2014.
Moving into the second half of 2016, the bank continued to forecast Chinese buyers would return to the world market for more meaningful volumes.
Oil-dependent markets in the Middle East and West Africa would remain challenging because of low oil prices in 2016, and Russia would also remain out of the market for at least another year. However, markets in the Asean region would continue to show more sustained demand growth.
As 2016 developed, production growth from the main export regions would continue to slow, the report said.
Gradual improvement in domestic demand would reduce export surpluses and eventually, in the second half of the year, tip them into negative territory, leading to a reduction of product available in trade.
While stocks would overhang any market recovery, demand from developing markets should, in a tightened market, begin to turn prices upwards, the report said.
Meanwhile, record numbers of dairy farmers had been putting their hands up to support others as part of DairyNZ's Dairy Connect service, during a period of low milk payouts.
More than 420 dairy farmers had volunteered to act as short-term mentors for the support service, which facilitates the sharing of information among farmers.
The number of farmers volunteering their time for the service had risen in the past year from 225 to 420, Dairy Connect manager Janine Broekhuizen said.
Nearly 60 connections had been facilitated over the past three months, a 50% increase on the same period last year.
