Rabobank 2026 Outlook: Geopolitics shapes global agriculture
The global agricultural landscape has entered a new phase where geopolitics – not only traditional market forces – will dictate agricultural trade flows, prices, and production decisions.
Last week’s GDT Event was marked by a “sideways shift of the index needle,” says Higgins.
“Prices inched upwards by 0.2% to land at an average price of US$3387/tonne. As usual there were mixed results across the dairy complex.”
The whole milk powder average price rose by a bare 0.3% to US$3114/t, she says.
“Results for delivery during much of the remainder of 2017 were in positive territory, signalling buyer comfort despite an anticipated increase in production during NZ’s spring peak.
“Buyers are largely comfortable with where WMP prices are sitting and they know that despite NZ milk production increasing over the coming season and during our spring peak they are happy to continue paying -- from what we are seeing -- in the low US$3000/t mark,” Higgins told Dairy News.
“Delving into GDT numbers, the periods for delivery [later in the year] are still in positive territory; prices are still increasing.”
Skim milk powder (SMP) was down 3.2% at US$2024/tonne. “Debate continues on the European Commission’s proposal to remove intervention stocks and this will continue to overhang offshore SMP prices and NZ product.”
EU exports of SMP for May 2017 year on year lifted 96%, placing EU SMP exports for the year to date at 26% year-on-year.
“The EU is locking and loading the low prices for skim milk powder and shipping it offshore,” says Higgins.
“We are seeing less product trickle into intervention over the last [few] weeks. Manufacturers have opted to ship it offshore, albeit at lower prices.”
Higgins says there is risk to anhydrous milk fat (AMF): the latest GDT Event saw a marginal decline. But prices are still very high for AMF.
“But we can see buyers for contract deliveries further out wanting more normal prices. There is a risk that buyers for AMF are looking to substitute vegetable oil where possible. So short term demand is fuelling the higher prices for AMF but the risk is that further out we will see the price decreasing as buyers turn towards alternative vegetable fats.”
Overall Higgins says the market is relatively well balanced and Rabobank anticipates that WMP, for example, will maintain largely its present range for the coming months.
Dairy fat prices will stay high but it will take a while for SMP to improve.
Westpac says milk production rose strongly in the early part of this year, but has slowed again in the last two months, especially in Europe. “That’s helped to ease our concerns that a renewed supply glut could push down world prices over the course of this season.
“At the same time though, the persistent strength of the NZ dollar is likely to undermine local currency returns. Our farmgate milk price forecast remains at $6.50/kg for this season.
