The objective of this report is to share with our Australian customers our learnings of the trends, status and overview of the International dairy market. We have sectioned the report by product category and hope you find it of interest.
US Market Wrap
US prices are steady to firm. Last month’s dip in wholesale prices for cheese and butter has been reversed with solid gains in the past few weeks, supported by a slow recovery in milk production from the deep winter. The US is now a solid export country and strong volumes are being sold. Reduced US production of cheddar cheese and butter, as more milk goes into milk powder for the export market – predominantly Non-fat SMP.
The US manufacturing sector pumped out strong growth in the volumes of mozzarella, gouda and skimmed milk powder in January reflecting increasing export demand.
China’s appetite for dairy product has been now long and consistent and has no short term appearance of reducing. This has been caused by number of factors. The first being that the Chinese government been encouraging larger scale dairy operations and therefore disincentivising smaller dairies, which has caused a decrease in milk flow for last season. On top of this the price of meat in China has increased so dramatically over the past 18 months that at that it has been more economical for dairy farmers to sell their cattle for meat rather than milking. Both of the above factors have caused huge demand for full cream milk powder (and other dairy ingredients) for reconstitution into fresh milk. This is expected to continue as long as the Chinese economy remains stable. There is some concern that the Chinese economy is in the form of a bubble and if things go bad this could be magnified.
Full cream milk powder is still extremely tight on a global scale mainly due to demand continuing out of the Chinese market (see above).
The cheddar market is also still extremely tight due to the fact that most manufacturers have been pulling milk away from cheese and into full cream milk powder over the past 6 to 12 months, which is caused a global shortage of cheese. Current prices have reflected this trend so we envisage that manufacturers will be making more cheese over the next six months.
There seems to be a huge shortage of mozzarella in the Oceania region, however this does not appear to be reflected globally where there is a plentiful supply out of both the US and the EU albeit at extremely high pricing.
Whey powder and permeates were the one product category that were plentifully available. This is obviously the result of recent increasing cheese manufacture.
In general it seems that the EU is having an extremely strong production year, up approximately 5% on last year. This may assist downward pricing if season continues.
So unless we see any major corrections in some of the bigger emerging markets (China, India etc), we feel there is significant enough demand to sustain high pricing for the short term. The result of this year’s Australian and New Zealand production seasons will have a large bearing on the direction of the market.
We hope you have found this report of interest and please remember that Maxum Foods has several supply relationships with International Dairy ingredient manufacturers that can best service your application. For more information please contact the Maxum Foods office.