Global dairy market starts 2024 with uncertainty

The global dairy industry is facing challenges. A reduction in the dairy herd in exporting regions such as the United States and South America has led to decreased milk supply. This decline is due to persistently low profit margins and adverse weather conditions. These factors also affect milk production in the European Union.

Weather plays a significant role in production decline

Dry conditions in New Zealand and heavy rainfall in Northwest Europe have significantly impacted production. It is expected that milk production in these areas will decrease more in the second quarter of 2024 than initially anticipated. Rabobank predicts a drop of 0.5%, revising earlier estimates that forecasted a decrease of 0.2%.

Mixed signals in the European market

In the EU and the UK, the season has had a challenging start due to ongoing rain, causing delays particularly in Ireland. Although some regions report a good start to grass growth thanks to mild temperatures, overall milk volumes are still behind last year's figures. For instance, the Netherlands experienced a decrease of 2.7% in milk deliveries during the first two months of the year.

At the same time, the sector is grappling with fluctuating dairy consumption. Signs of recovery in demand are interspersed with periods where consumers react cautiously to rapidly rising prices. This influences how the dairy market is adjusting to current economic and climatic challenges.

Thus, the European dairy industry continues to face various challenges that affect both production and trade.

Rabobank.nl