Prices for milk are forecast to rise modestly in the first half of 2017, a Rabobank report says.
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Senior dairy analyst Michael Harvey said the “taps of the global supply” were starting to “turn off”.
“Farmers around the world are adjusting production (because of) lower prices,” he said. “This response together with demand growth (overseas) is expected to see dairy surpluses reduce.”
Mr Harvey said the global market had caught up with Australia and while shaken by the late-season price reductions, dairy farmers were facing “these storm clouds in better shape” than before.
The report showed that despite next season’s challenges, with many farmers producing below break-even, the industry was in a promising position to manage the cycle.