Here is John Hallo in our latest edition of the Inside Track, sharing updates on global dairy markets. In Edition 178, John covers GDT results in line with pre auction sentiment, as milk supply remains healthy from all major global regions.
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Hello and welcome to Maxum Foods Inside Track. Well, aren’t we just up and about here in Brisbane. We had the AFL Grand Final two weeks ago where the Brisbane Lions won the Premiership and then last Sunday, we had both the Brisbane Broncos, men’s and women’s team winning the NRL Premiership. So once again proving that Queensland is the greatest sporting state in Australia. Anyway, besides that let’s have a look at see what’s happening in dairy.
Starting off with whole milk powder so there was no real surprises last night on the auction we saw a decrease of 2.3% on whole milk powder as mentioned in previous Inside Tracks milk is good out of New Zealand milk flow up year on year milk flow around the globe in fact is is all up year on year so supply is healthy globally and demand a little on the wane so we did see whole milk powder come back last night we we have seen Fonterra put over 16,000 ton extra for the season on the GDT over coming months so yeah the supply will be there so it’s just a matter of demand holding up but as things are going at the moment everything is as expected in a reasonably bearish market.
Having a look at skim, not a lot to report on skim, an even result last night on the auction. There is skim in abundance in EU and the US and also Australia and New Zealand. So supply is good, but demand seems to be holding up and pricing flat.
Having a look at butter fat, so we saw a 3% decrease on butter last night. Global fat or cream supply has been very healthy as we’ve discussed earlier, especially in the United States, but also in the EU as well. So yeah, cream supply is good, fat production is definitely healthy globally. So we did expect to see a slight decrease as we see EU and US pricing putting pressure on global demand and supply dynamics. For the next two to three months, yeah, we will have to see some more demand come in just to mop up that excess cream. In Australia and New Zealand, there is still some good demand for the Fonterra NZMP, out of China, so that is holding up the Australian New Zealand pricing. However, that could come under pressure with US in coming months.
Having a look at cheese, if we look over in the States, the CME or futures market there has been bearish for the last couple of weeks, so there is good value in US mozzarella and cheddar globally. EU pricing has remained stable but bearish to stable conditions there as well. The Australian New Zealand market a bit trickier to read. Production has been on forecast however demand seems to be holding up okay so pricing is reasonably stable. You’d think leading into Christmas there will be some more demand so locally we believe pricing will hold up on cheese.
Having a look at sweet whey and proteins, so some real competition for liquid whey at the moment, whether they spray dry off as sweet whey or then further value add as WPC 80 or 90.
So there’s a little less supply of sweet whey at the moment. If you’re looking at the protein side of things, demand is still red hot for both WPC and WPI. We did see a bit of a dip in pricing on WPC in the US a few months back, however that has corrected and demand and pricing are as bullish as ever. We don’t really see a lead up in that over the next two to three months. So yeah, because we just we don’t foresee any demand softening for those products.
As a broad global summary, milk is healthy, milk production in all global regions at the moment demand flat, which creates some good buying opportunities for Q4, Q1, Q2 on milk commodities. Thanks very much for listening to today’s Inside Track. Have a great fortnight and we’ll see you again soon.
