A sobering report looking at this issue which has been debated much in the last few months as seen in the NZX/blog Well worth a read. A summarized conclusion reports that demand outstripping supply caused the rapid rise in price of dairy commoditys in 2007 as middle income consumers ate more products derived from dairy . A decline in demand was created for a start, by resistance to high prices and now fuelled by the global economic crisis and increasing supply levels especially in the US and EU. Thus the perfect storm to cause prices to fall rapidly. The gDT auction price shows how the market is tracking and direction it will take in the future. With the reintroduction of the EU subsidies and possibly the US ,and many predicting the global recession has a way to go yet, it may be 2010 before prices take a positive upturn.
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