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It's Always Darkest Before The Dawn – Rabobank Q2 Dairy Quarterly

The cumulative effects of high food price inflation over the past 24 months, along with slowing economic activity in 2023, have translated into lower dairy demand in developed and emerging markets, according to a new report from agricultural banking specialist Rabobank.

In its Q2 Dairy Quarterly report , Rabobank says various companies in western Europe, Australia, Brazil, China, and other emerging markets are experiencing weaker-than-expected sales in 2023 (mostly in volume terms).

“Households in many regions remain under financial pressure, which is impacting food purchasing behaviour,” the report says.

“However, one notable exception is the US, where current consumer demand for dairy products remains firm.”

The report says global milk production is still rising but losing momentum, and that slower production increases could stabilise global market prices.

“Our current outlook for lower production in the EU and US, with limited growth elsewhere, is likely to support global dairy prices in Q3 and into 2024,” Rabobank senior agricultural analyst Emma Higgins said.


Rabobank NZ Senior Agricultural Analyst, Emma Higgins

New Zealand update

The report says it’s been a lean autumn for New Zealand dairy farmers with the forecast milk price moving lower over the 2023 calendar year and wet weather impacting milk production volumes.

Ms Higgins said Rabobank’s forecast for the new 2023/24 season sits at $8.20/kgMS – a little higher than the opening milk price forecast of $8.00/kgMS announced by Fonterra in late May.

“A farm gate milk price around these levels means dairy profitability will remain a real challenge for many dairy farmers over the coming season,” she said.

“While profitability depends on farming systems and management styles, forecast farmgate milk prices are now at or below Rabobank’s estimation of average costs of production.

“Fortunately for ‘shared-up’ Fonterra suppliers, a special 50 cent dividend from asset divestments will be paid in August. However, some suppliers to other milk processing companies could be facing a chilly winter, with minimal or no ‘retro’ payments coming through over winter and spring, due to the different advance rate model.”

The report says New Zealand milk production is likely to increase this coming season, with the bank expecting production volumes to lift by one per cent on the previous season.


Rabobank New Zealand is a part of the global Rabobank Group, the world’s leading specialist in food and agribusiness banking. Rabobank has more than 120 years’ experience providing customised banking and finance solutions to businesses involved in all aspects of food and agribusiness. Rabobank is structured as a cooperative and operates in 40 countries, servicing the needs of about 10 million clients worldwide through a network of close to 1000 offices and branches. Rabobank New Zealand is one of the country's leading agricultural lenders and a significant provider of business and corporate banking and financial services to the New Zealand food and agribusiness sector. The bank has 32 offices throughout New Zealand.

Media contacts:

David Johnston
Media Relations Manager
Rabobank New Zealand
Phone: 04 819 2711 or 027 477 8153
Email: david.johnston@rabobank.com

Denise Shaw
Head of Media Relations 
Rabobank Australia & New Zealand 
Phone: +612 8115 2744 or +61 2 439 603 525 
Email: denise.shaw@rabobank.com