The ripple effects of COVID-19: A look into global dairy

By Beth Newhart contact

- Last updated on GMT

Rabobank is lowering its 2020 US demand growth projections from 0.8% to 0.5%, as consumers quarantine during the COVID-19 pandemic. Pic: Getty/Chinnapong
Rabobank is lowering its 2020 US demand growth projections from 0.8% to 0.5%, as consumers quarantine during the COVID-19 pandemic. Pic: Getty/Chinnapong

Related tags: coronavirus, COVID-19, Rabobank, Milk production, Milk, Dairy farmers

Rabobank assesses how the ‘corona hangover’ will impact global dairy markets in its latest report. Demand in China is already starting to bounce back after its virus exposure seems to have peaked, while the US will suffer in the coming months as cases rise.

In the midst of the global COVID-19 pandemic, most industries are struggling with how to mitigate impacts from a potential global recession. Dairy is no different. Demand is stalled for now, though milk production in the world’s biggest markets is still rising.

In Q4 of 2019, global dairy product prices were on an upward trajectory. This has been stagnant in Q1 2020. But for China, at least, Rabobank projects that consumer buying patterns will normalize by the second half of 2020.

In its latest report​, Rabobank reminded the industry that dairy was already at risk in 2020 thanks to a projected slowdown in the general global economy, even before the COVID-19 pandemic. The situation is now likely to escalate.

Delaying agreements and demand

Milk production from the big seven global regions is rising, and all are expected to report year-on-year growth in Q2 2020, even against low comparables. In the US, production is strong for now while there is a ‘slightly gloomier’ outlook for demand in the coming months.

The EU’s milk production is growing, bolstered by mild winter weather, while China’s dairy import requirements are expected to drop by 19% in 2020. Rabobank says this is based on anticipated lower dairy demand in retail and foodservice channels and a build-up in milk powder stocks.

However, Rabobank pointed out that China’s 2020 imports forecast is not expected to be as severe as the 2014-2015 destocking, which resulted in a 35% decline in 12 months.

"The combination of reduced Chinese imports, significant supply chain disruptions, including extreme competition for shipping containers across the globe, and rising dairy surpluses in export regions will keep downward pressure on global markets through much of 2020,"​ Rabobank said.

Unsurprisingly, the drop in global tourism is already impacting foodservice sectors, with Southeast Asia being particularly vulnerable. And a ‘spring flush’ from mild winter conditions in the US and EU could have dairy supply exceeding forecasted demand.

Following the landmark signing of the phase one trade deal between the US and China, measures of the deal hang in the balance. China committed to purchasing significant quantities of dairy products from the US, but Rabobank said it’s possible that the country could invoke the article of force majeure to potentially delay that agreement.

Rabobank is lowering its 2020 US demand growth projections from 0.8% to 0.5%. The end of February brought one of the worst weeks in the US stock market’s history, which prompted a cut on short-term interest rates. This could result in lower domestic dairy commodity prices.

“Central banks around the globe are proactively addressing the economic impact of the coronavirus outbreak with interest rate cuts and stimulus packages. These could impact currencies and trade flows in the coming months,”​ Rabobank said.

Related news

Related products

show more

Know your Ethnic Dairy Opportunities

Know your Ethnic Dairy Opportunities

DuPont Nutrition & Biosciences | 05-Dec-2018 | Technical / White Paper

Global consumers often look for something new from the yogurt category and products with a good story. In Western markets, this demand is driving a trend...

Accelerate your supply chain as pressures intensify

Accelerate your supply chain as pressures intensify

William Reed | 19-Sep-2018 | Technical / White Paper

Food, Drink and Non-Food manufacturers are under pressure. Range reviews, massive retail mergers, the backlash against plastic packaging and the ongoing...

Related suppliers


Post your comment

We will not publish your email address on the website

These comments have not been moderated. You are encouraged to participate with comments that are relevant to our news stories. You should not post comments that are abusive, threatening, defamatory, misleading or invasive of privacy. For the full terms and conditions for commenting see clause 7 of our Terms and Conditions ‘Participating in Online Communities’. These terms may be updated from time to time, so please read them before posting a comment. Any comment that violates these terms may be removed in its entirety as we do not edit comments. If you wish to complain about a comment please use the "REPORT ABUSE" button or contact the editors.

Follow us

Featured Events

View more


View more