Dairy Quarterly Q2 2020: Waiting for the Dust to Settle

Milk production is forecast to continue expanding across the dairy-exporting regions, despite weather-related issues, lower milk prices, and efforts to bring supply back in balance with demand in many areas, according to the latest RaboResearch Dairy Quarterly titled “Waiting for the Dust to Settle.”

“The Northern Hemisphere has experienced a rebound in milk and dairy product prices toward the end of Q2, but it may be too soon to call this a true recovery,” writes Ben Laine, RaboResearch Dairy Analyst. “Much of the price support has been driven by government aid that will likely slow in the months ahead. The upcoming US presidential election could extend heightened levels of support in the US.”

Many dairy markets are still dealing with imbalances from demand destruction due to government lockdowns. The heightened retail sales and lower foodservice sales will begin to converge, returning to a more normal balance, but it will take time, and there will be limitations that will prevent a complete return to previous norms, especially in foodservice sales.

Once government aid and market support slows, market fundamentals will again take hold in a slower economy that will take time to heal from the pandemic's economic damage. Inventory build will put downward pressure on dairy product prices in the months ahead due to the combination of heightened levels of stocks and competition for reduced import demand.

Moreover, the world’s largest dairy import market will be more absent in the world market in months ahead. China’s dairy imports are forecasted to drop 15%YOY in 2020. Weaker currencies will challenge imports elsewhere.

Podcast: Global Dairy Outlook - Waiting for the Dust to Settle

Australia & New Zealand

The underlying global dairy market fundamentals look set to remain very weak for much of 2020. Tim Hunt and Michael Harvey discuss whether New Zealand and Australian dairy farmers will dodge a bullet.

Podcast: Changing Dairy Market Conditions in Oceania - The 2020/21 Season Outlook

North America

Both Australia and New Zealand are coming off of exceptional farmgate milk prices from the 2019/2020 season. Oceania’s milk production season was coming to a close in Q2 2020 as Covid-19 took hold around the globe. Global dairy strategist Mary Ledman and Australia-based senior dairy analyst Michael Harvey discuss the impacts of Covid-19 and the outlook for the 2020/21 production season in Australia and New Zealand.

  • Ben Laine

    Analyst - Dairy
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  • Mary Ledman

    Global Sector Strategist – Dairy
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  • Michael Harvey

    Senior Analyst - Dairy
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  • Tom Bailey

    Senior Analyst - Dairy
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  • Emma Higgins

    Analyst - Dairy
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  • Andrés Padilla

    Senior Analyst - Beverages, Dairy, F&A Supply Chains
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  • Sandy Chen

    Senior Analyst - Dairy
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  • Saskia van Battum

    Analyst – Dairy
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  • Richard Scheper

    Analyst - Dairy
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  • Shiva Mudgil

    Analyst - Dairy
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