Danone, foreseeing a recovery in Chinese dairy imports, stood by expectations of a recovery in milk prices – eventually – even as skim milk powder prices hit their lowest since 2009.
The French-based water-to-infant formula group, the world’s largest yoghurt maker, said that its analysis continued to support a forecast it made earlier in 2015 of dairy prices recovering in the second half of the year.
“The recent evolution of supply and demand is still showing that there would be a rebound between the third-fourth quarters and the beginning of next year,” Cecile Cabanis, the Danone finance director, said.
“It’s an assumption that is serious, and that we continue to have in our forecasts.”
‘Chinese imports will start again’
The expectation reflected ideas of a return to buying by Chinese importers, whose slower purchases since a stock-building spree early in 2014 have been seen as a major cause of the tumble in world dairy prices over the past year.
Chinese dairy imports in February were down 36% year on year, led by a 49% slide in volumes of whole milk powder.
“We expect that the Chinese imports will start again, and they will create more pressure on demand, hence have an impact on prices,” Ms Cabanis said.
Indeed, in the infant milk formula market, she said that Danone had already detected signs of a rebuild in inventories early in 2015.
“We had some stocking effect in infant milk formula,” she said.
The comments came even as dairy prices at GlobalDairyTrade, the benchmark physical auction, were heading lower for a third successive event, led by a drop in skim milk powder prices to their lowest since September 2009.
However, in the US, producers said this week that they detected signs of a stabilisation in domestic prices.
Danone’s official milk market forecast sees, for the European Union and the US, “lower prices in the first half [of 2015], with a rebound likely in the second half of the year”.
In emerging markets, 2015 will witness “gradual price increases all year long”.
(Source – http://www.agrimoney.com/news/danone-offers-hope-for-depressed-dairy-prices–8217.html)