Concerns about container availability are driving Oceania prices higher and in the US the opposite is occurring as higher freight costs are challenging exports.
In the quarterly Rabobank report on global dairy supply and demand Laine says supply growth is modest and mostly happening in the US.
“Economic growth is expected across much of the world in 2021, which is positive for dairy demand,” Laine said.
“Elevated milk prices in China are setting records but are likely reaching a peak.”
The jump of 21% in Oceania whole milk powder (WMP) prices in the latest Global Dairy Trade (GDT) auction has put a lid on the competitiveness of that source of supply.
Laine says inventories are relatively balanced on both supply and demand sides and the Northern Hemisphere peak season could coincide with more opening up of foodservice outlets that have remained mostly idle over the past year.
“By the middle of this year there should be a return to familiar consumer patterns and on balance that should be positive for dairy markets,” he said.
Rabobank forecasts 1.1% increase in milk production in 2021 across the big seven producing world regions.
That would be slightly down on the 1.6% increase in 2020 and should help support markets as supply settles into post-vaccine balance.
The impact of wide vaccination should be felt mid-year in higher economic activity, although there will be a long tail to some aspects of the recovery.
Rabobank has forecast a $7.80/kg milksolids payout in NZ this season after seeing the recent 25% increase in dairy commodity prices and in anticipation of dynamics in China supporting further upside to come.