Dairy prices start to recover – market seems to have bottomed out.

Last week there was good news for farmers in New Zealand with the Global Dairy Trade (GDT) prices on the up after some concerning months. It is now of the opinion of some analysts that prices have bottomed out and it will be an upward trend from now on.

What caused the price reduction over the last few months has been the bumper season for dairy farmers in New Zealand and the surge in European production. However since then a couple of indicators suggest that prices will be on the rise:

1. US production has slowed
2. EU production has peaked

Below are the GDP results which show an interesting correlation between the amount offered for sale (Supply) and the tonnage sold (Demand), also notice the surplus and the price. Source: Dairy News – June 12 2012

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