Here is John Hallo in our latest edition of the Inside Track, sharing updates on global dairy markets. In edition 185, Oceanic pricing has stabilised as global keeps up with healthy supply conditions in New Zealand.
Click here to watch more Inside Track videos.
The Inside Track Podcast
Get up to date on the go. Subscribe and Follow on your preferred app:
Welcome to this edition of Maxum Foods Inside Track. Summer is in full swing here in Brisbane and the heat has definitely arrived. Meanwhile, sports fans are enjoying the Australian Open in Melbourne with plenty of strong local representation. There is also plenty happening in global dairy markets, so here is a quick overview of the latest developments.
Whole Milk Powder
Whole milk powder recorded a steady result in the latest GDT event, increasing by 1 percent after a 7 percent correction previously. This outcome aligned with futures expectations. Demand dynamics varied by region. North Africa showed a strong increase in buying activity, supported by recent Algerian tenders, while China and North Asia softened. Other global regions compensated for this decline which resulted in balanced demand overall.
On the supply side, New Zealand milk production increased by 3 percent in December. Conditions have been favourable during the shoulder of the season and early indications suggest January is also performing well. There is plenty of milk in the system and demand remains stable which is creating relatively flat conditions for whole milk powder.
Skim Milk Powder
Skim milk powder demand has been easing over the last six months on the GDT. However, the last two trading events have shown an upward shift which is a positive sign. Global supply remains abundant in the EU which is keeping prices flat. In the US, inventory levels are lower and this is helping to support prices. Over the next three months, the skim market appears more balanced than it has been in recent times.
Butterfat
In the EU, butterfat continues to display bearish indicators. Supply remains strong and demand is flat, resulting in stable pricing. The US is also experiencing good supply and a significant volume of butterfat entering export markets. CME pricing continues to reflect bearish conditions. Increased fat components in US milk are contributing further to supply and no major recovery signs are expected in the next two to three months.
Conditions in New Zealand and Australia look more stable. Recent GDT events recorded increases for AMF and butterfat which suggests improved market sentiment. Attractive pricing for New Zealand and Australian butterfat may draw buyers back into the market.
Cheese
Cheese markets in the EU follow a similar pattern to butterfat. Supply is strong and milk flow is healthy. Demand remains flat which is keeping the market on the bearish side. The US is also experiencing bearish conditions with abundant milk supply and high production levels. Domestic consumption is down, although export volumes are strong and supported by lower prices. The outlook for US cheese remains bearish for the next three to six months.
In contrast, the New Zealand and Australian market is more balanced. Production is solid and demand is holding up which is supporting a more stable price environment compared to the EU and the US.
Whey Proteins
Whey proteins continue to be the standout performer across dairy commodities. Global demand is extremely strong. The recent update to the US dietary guidelines promotes higher protein intake and encourages the inclusion of full fat milk in the diet. This is the first major revision in more than twenty years and it will place additional pressure on whey protein supply.
Demand is also being driven by consumers using whey protein as part of weight management programs that include medications such as Ozempic. This combination has created a perfect storm that is resulting in record global demand. Supply remains constrained because manufacturing capacity is limited and producers are focused on high value protein streams. The imbalance between supply and demand continues to push prices higher. Over the next three to six months, the outlook for both WPC and WPI remains very bullish with no signs of easing.
Thank you for reading this edition of Inside Track. There are several contrasting trends across the dairy complex. Some markets are stable, others are under pressure and whey protein continues to surge ahead. We hope you have a wonderful fortnight and take good care of yourself and those around you.
