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Japan's Dairy Prices Bounce Back

27 January 2017

JAPAN - International dairy product prices have seen a rebound after farmers in Europe and New Zealand curbed production in the face of price falls in 2015-2016, resulting in an easing of global oversupply.

The benchmark Global Dairy Trade Price Index stood at 1,040 in mid-January, up 66 per cent from the recent low set in March 2016 and the highest in roughly two and a half years, according to the latest data.

The GDT price of butter rose 63 per cent from its recent low in July 2016 to $4,382 per ton in mid-January. That of cheddar climbed 37 per cent during the same period to $3,940 per ton.

International dairy prices stayed low in 2015-2016 due to the liberalization of production by the European Union.

In spring 2015, the EU abolished production quotas for member states in expectation of an increase in global demand, especially in emerging economies, prompting the bloc's farmers to boost output.

However, this coincided with the huge Russian market being cut off when Moscow banned imports from the EU as part of the showdown over Ukraine.

That decision along with slowed growth in demand developed into a global oversupply.

Source: Nikkei Asian Review

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