Rabobank International predicts dairy prices will drop over the next year amid increased supplies from exporting countries and weaker demand from China.

Tim Hunt, Rabobank’s global dairy strategist, said that slower economic growth will limit Chinese demand, especially after many consumers “significantly bought forward” supplies in the first three months of 2014, according to aBloomberg article by Elizabeth Campbell.

The Bloomberg article quoted Hunt as saying that prices may fall to $18.66 by the fourth quarter.

The article continues: "There will be an 'orderly easing' of dairy prices, not a crash, because China buyers will come back to the market after a 'temporary lull,' said Hunt."

Hunt also said the rate of supply growth will ease in the second half of the year.

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Other factors that could affect the market for U.S. milk include a new "cold chain pipeline" currently being tested to take milk from Australian dairy farms to Chinese tables within seven days and China's tighter quality control regulations on milk imports.

Overseas suppliers are required to register with China's quality watchdog before they are allowed to import dairy products, according to a Reuters article. Companies not registed cannot import as of May 1. PD

—Summarized by PD staff from cited sources