According to Rabobank’s Quarterly Global Dairy report, by mid-year there is expected to be some return to familiar consumer patterns for dairy demand as foodservice reopens.
Rabobank has forecasts a 1.1% increase in milk production across the Big-7 dairy-producing regions in 2021, predicting that most dairy prices will peak in Q2 or Q3. Whilst this is a decrease compared to the 1.6% YOY increase in 2020, and represents a modest tightening of supply, the increase should help support markets as demand settles into post-vaccine balance.
“China’s near-term import demand is elevated, but is expected to slow in the second half of the year. High domestic milk prices are driving interest in expanding domestic milk production, which could reduce import needs in the future,” commented Ben Laine, analyst – dairy, at Rabobank.
Mr Laine explained that milk prices favoured imported whole milk powder (WMP) early in the year, but that demand could see a pause following a recent spike in Oceania prices, with prices in China having likely reached a peak.
Demand, he said, will be in the driver’s seat or dairy in 2021: “Throughout the pandemic, global milk supply has been much less impacted than demand. Disruptions arose as consumers made significant shifts in their consumption patterns, which spilled through supply chains. Most of those shifts were abrupt and severe as we entered the crisis, but coming out should be much more gradual.”
He added that, although there will and absence of arenas or convention centre events this year, with restrictions on restaurants are likely to be lifted, and holiday gatherings less likely to be discouraged, there will be a net positive impact dairy demand, particularly in markets like the US, where a greater volume of dairy is consumed through foodservice channels than through food prepared at home.