Rabobank flags rising global dairy prices, warns of downside risks ahead
While global dairy commodity prices continue to climb in most key exporting countries, the second half of the year is expected to bring increased downside risks.
Rabobank dairy analyst Emma Higgins believes it's still early days.
"We will need to see fundamental positive change to income for consumers and also increase confidence within China before we can get excited about this stimulus package having a significant impact on our food and fibre exports," she told Rural News.
"These announcements are a step in the right direction for these fundamentals to change, however, it's early days."
Adopting a suite of measures to reduce borrowing costs, the People's Bank of China cut interest rates on existing mortgages by 0.5 percentage points and supported new lending by reducing the level of reserve banks must set aside before making loans.
Last week's Global Dairy Trade (GDT) auction saw whole milk powder prices rise 3% to US$3559/tonne, its highest average price on the platform for the past 24 months.
NZ dairy analyst Rosalind Crickett says future prices could be linked to the Chinese stimulus package.
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"Looking ahead, there are a variety of factors at play to keep an eye on, particularly with the economic stimulus efforts by the Chinese government and the implications it will have on its domestic production and imports."
