Dairy prices will slide over the next year amid increased supplies from exporting countries and weaker demand from China, according to Rabobank International.
U.S. and European producers are responding to “exceptionally strong margins” and increasing output after milk prices rose and feed costs dropped, said Tim Hunt, Rabobank’s global dairy strategist. Slower economic growth will limit Chinese demand, especially after many consumers “significantly bought forward” supplies in the first three months of 2014, he said.
World dairy prices, tracked by the United Nations, reached an all-time high in February, and rose 29 percent in 2013, compared to a 3.8 decline in overall food costs. U.S. consumers may pay as much as 3.5 percent more for dairy products this year, the government has forecast.
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