Russian dairy market develops rather pessimistic, both for producers, and for processors. Russian consumers are probably not in better conditions.
Despite successes in increase of milk production in the country, this fact has rather negative influence now. In conditions of weak consumer demand, production is growing, increasing the supply on the market.
In order to increase buyer’s interest, it is necessary to reduce prices and either work at low profitability, or to stop the activity. Now this question is pressing for both processors, who have to reduce milk prices, and for farmers who have no choice.
Russian experts forecast that farmers will not be able to work in current economic conditions. Because of further decline of milk price, they will have to reduce production.
Decrease of milk price became more noticeable from beginning of spring in Russia. Prices of spot milk fell traditionally at first. Milk from farms also became cheaper for last two weeks.
Milk is valued at RUB 21-24/kg (VAT excl) in the middle of March.
Western experts are disappointed in short-term prospects of Russian dairy market. Still three months ago there was a hope for lifting of import ban by Russia and renewal of foreign trade.
Now experts of Rabobank forecasts that exporters should not expect activization of Russia on the world market any more (at least, till the end of the year).