Dutch lender Rabobank has warned that rising milk production in all of the major dairy-exporting regions of the world could pose challenges for dairy markets heading into 2021.

“Milk production growth across the major export engines began in the second quarter of 2020 and is forecast to continue expanding into 2021. With this production growth in mind and consumption that will take time to recover, Rabobank expects the global market fundamentals to remain weak into the first half of 2021,” said Rabobank in its quarterly dairy market report.

The Dutch bank, which is a co-op owned by farmers, is forecasting milk production growth of 1% to 2% in the key milk-producing regions of the world – the EU, US, South America and Oceania.

However, there are positives. Demand from some dairy importers has been quite strong in 2020, as buyers seek to stockpile product over fears of a second or third wave of the COVID-19 pandemic.

Dairy imports by China, Japan, Indonesia, Algeria, Malaysia, South Korea and Vietnam are all ahead of last year.

Dairy imports by China have been particularly strong so far this year and stood at just under 1m tonnes up to the end of July.

Additionally, Rabobank research suggests dairy has benefitted from COVID-19 as the lockdown has revitalised the category as consumers returned to a trusted, healthy product. However, Rabobank warns that the rise in protectionism across the world and the push for self-sufficiency for food security reasons is a threat to dairy.