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Thursday, December 14, 2017
 2012 Predications for Dairy Volume Sales Growth Remain Vague  

By Ben Bouckley

Discussing global dairy demand in their quarterly outlook report, Rabobank’s Food and Agribusiness Research and Advisory Dairy team said: “In the face of weak economics and expensive pricing, sales volume growth remained elusive in key western markets.”

“Consumption in key western markets appeared at best stagnant, reflecting low employment growth, falling real incomes, rising fuel prices and high retail pricing of dairy.”

By contrast, they noted that supply growth amidst the ‘Big 7’ export regions grew 3.2% year-on-year in the three months from November to January, the authors said, with strong contributions from all players bar Brazil: namely New Zealand, the EU, US, Australia, Argentina, Uruguay and Brazil.

But on the demand side: “In the US, retail sales volumes of milk, cheese, frozen pizzas and even yogurt contracted in the opening months of 2012, although foodservice cheese sales are faring better.”

Stagnant Household Consumption
In Germany, household consumption of all consumer products (with the exception of cheese, which was stagnant) fell in the three months to January in year-on-year terms, Rabobank said, while companies had generally reported flat sales across the EU.

Stronger economic fundamentals supported better growth in emerging markets such as China, Malaysia and Vietnam, Rabobank said, especially in infant formula, while such markets helped sustain “brisk international trade” during the period.

And after six months of light purchasing (both in seasonal and year-on-year terms) China “bought vigorously” in December and January. “This reflects the clearing of previous excess local inventories, solid local demand and attractive pricing offshore compared to local,” the report authors said.

Mexico ‘sucked in’ Milk Powder
Meanwhile, Mexico “sucked in enormous quantities of milk powder in the face of a drought in Northern production regions”, while solid support from Southeast Asia and the Middle East more than offset poor Russian demand (due to local supply improvements).

Rabobank said it expected another strong quarter from importers in Q2. “Despite some deceleration, domestic demand growth in emerging regions remains adequate to generate increased requirements for imported milk, given ongoing challenges with boosting local milk production.”

Recent price falls would further increase the appeal of imported products on such markets given very high local product pricing, Rabobank said.

But the bank warned that strong demand from emerging markets, offset in part from weakness in the OECD markets (mainly western countries, accounting for 40% of global consumption) meant that global demand growth would remain compromised for some months to come.
 

Source: Rabobank


Posted on Thursday, March 22, 2012 (Archive on Thursday, March 29, 2012)
Posted by bsutton@adpi.org  Contributed by bsutton@adpi.org
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