Search our website enhanced by Google.
- Home
- News
- Global producer margins show improvement following an uplift to commodity prices – Q3 Rabobank update
Global producer margins show improvement following an uplift to commodity prices – Q3 Rabobank update
Thursday, 10 October 2024
Challenging weather conditions, fewer cows and high costs of production slowed global dairy supply in 2024. However, Rabobank explains that rising commodity prices are now having a positive impact at farm gate, likely to lead to increased production.
Unpredictable weather across many regions, fewer cattle and high feed costs contributed towards a year-on-year reduction in milk supply throughout the first half of 2024. However, with now more affordable feed prices and easing inflation for agricultural inputs, margins are improving. For the major exporting regions, Rabobank predict an uplift for Q3 and Q4, resulting in a small growth of 0.14% YoY for 2024, followed by a larger 0.65% growth in 2025.
World wholesale prices have been improving as the market reacts to low supply. According to Rabobank, prices are now starting to flow into farmgate milk prices. Compared to June 2023, EU prices have increased by 4%, and by 12% for Ireland. China is an exception, where high milk production and lacklustre demand has driven prices down. Production changes and the current EU/China trade dispute is likely to cause further market implications.
The US has experienced declining milk production for over a year. Higher milk prices are expected to drive some growth, though the cost, and availability, of replacement heifers could limit this. Oceania is set to see modest growth in late 2024 and into 2025. New Zealand’s spring flush is, as ever, dependent on weather conditions, with the potential for La Niña weather patterns a risk.
Production has been mixed in Europe and the UK. Challenging weather conditions and the threat of Bluetongue virus has contributed to lower overall production. Ireland is predicted to see a 5% decline vs 2023. Meanwhile, Poland is up by over 4% in May year-on-year. Looking ahead, more affordable feed prices and better margins could encourage greater supply.
While retail price deflation continues in many regions, EU dairy CPI deflation is losing pace. Record butter and cream prices may create demand resistance if prices translate to the consumer too quickly.
Sign up to receive the latest information from AHDB.
While AHDB seeks to ensure that the information contained on this webpage is accurate at the time of publication, no warranty is given in respect of the information and data provided. You are responsible for how you use the information. To the maximum extent permitted by law, AHDB accepts no liability for loss, damage or injury howsoever caused or suffered (including that caused by negligence) directly or indirectly in relation to the information or data provided in this publication.
All intellectual property rights in the information and data on this webpage belong to or are licensed by AHDB. You are authorised to use such information for your internal business purposes only and you must not provide this information to any other third parties, including further publication of the information, or for commercial gain in any way whatsoever without the prior written permission of AHDB for each third party disclosure, publication or commercial arrangement. For more information, please see our Terms of Use and Privacy Notice or contact the Director of Corporate Affairs at info@ahdb.org.uk © Agriculture and Horticulture Development Board. All rights reserved.