Global dairy commodity prices are expected to continue to rise in 2017 due to reduced milk supplies and improved import demand, AHDB Dairy has reported.
This assertion is based on Rabobank’s latest outlook projection for the dairy market.
Significantly, it predicts that producers will struggle to expand production to take advantage of rising prices until at least the second quarter of 2017.
This is particularly true for the EU, AHDB has said, where the milk production reduction scheme has been put in place by the European Commission.
Rabobank has also warned that the effect of the scheme is still uncertain, particularly now farmgate prices are increasing.
Participants could still choose to produce to receive the market price, rather than taking the reduction payment.