It reports that key commodities fell 12% to 26% through the first half of the period, recovering most of the ground in late September. More milk was produced globally than the market needed, and there is now significant inventory.
Rabobank expects the market for milk to tighten in the first half of 2016, due to low milk prices in New Zealand and further price falls in other countries slowing milk production.
It expects exportable surpluses of new milk to reduce by 7%, due to low milk prices and a modest growth in consumption. Market sentiment will change. Chinese imports are likely to stablise, not increase, and Russia will remain out of the market due to the trade ban. Stock will normalise around mid-2016.
Upside risks are the strong El Nino climate pattern, which may tighten supply. Downside influences are the removal of EU quotas and depreciation of the Euro, leading to surplus growth.
