Rabobank suggests the re-balancing of global fundamentals for new milk is now near at hand.
The bank's third quarter dairy report says more milk was produced globally in the third quarter than the market needs.
However, it argues low milk prices in New Zealand and further price falls elsewhere will put brakes on milk production.
The report says lower prices will also boost demand.
Rabobank Global Strategist Tim Hunt predicts the end result will be a gradual erosion of excess global milk inventories, with stocks normalizing by around the middle of next year.
