Dairy Prices Seen Declining by Rabobank China Demand Ebbs
In response to rising prices, declining feed costs, and strong margins, U.S. and European dairy producers have increased output.. However, slowing economic growth in China and significant forward buying by Chinese buyers in the first quarter of 2014 will result in a controlled slide in dairy prices in the coming year. Global dairy prices have reached an all-time high in February 2014 after increasing 29% in 2013 as overall food prices fell 3.8%. As China reduces purchases, producers will be looking for alternate markets but many are experiencing currency devaluation against the U.S. dollar reducing their purchasing power. The price slide will be a temporary one according to Rabobank as the rate of supply output eases in the second quarter of the year.
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