Dairy market pricing steady, but a tighter fourth quarter is likely, says Rabobank
A dairy producer's gain is a dairy processor's pain.
A "slow squeeze" is likely to start reducing pressure on U.S. dairy producers through the rest of 2012, with a recovery gaining legs in early 2013, according to the latest quarterly global dairy report from Rabobank's Food & Agribusiness Research and Advisory (FAR) group. The report says that though the market experienced a small rally in June as buyers moved to cover short-term needs, U.S. milk prices remained down 23% overall, compared to this time last year.
Producer milk prices in the U.S. have fallen below break-even levels in 2012 due to a wave of growth in the global milk supply. This substantial global price reduction has led to financial difficulties for producers who have not locked-in their feed purchases, or who do not grow their own feed.