Here is John Hallo in our latest edition of the Inside Track, sharing updates on global dairy markets. In edition 187, global demand continues to be strong with butter and skim on the rise.
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Hello and welcome to Maxum Foods Inside Track. It is a beautiful late summer day here in Brisbane and the excitement of the Winter Olympics continues with Australians performing incredibly well. It is impressive to see a country that is mostly desert sitting high on the medal tally with five medals already secured. There are still a few days to go which means more opportunities for Australia to shine.
Let us take a look at what is happening in the dairy industry this week.
Whole Milk Powder
Whole milk powder on the latest GDT auction increased by 2.5 percent which aligned with expectations and futures market indications. Global milk supply remains healthy across all major regions. New Zealand in particular is having a strong finish to its season which is contributing to solid supply levels. Despite this, demand continues to hold up well.
North Asia was the largest buyer at the auction. As we move toward the off season and the winter months supply in New Zealand is expected to tighten. If demand remains steady pricing should continue to stay firm.
Skim Milk Powder
Skim milk powder also delivered a bullish result with an increase of more than three percent following a ten percent rise at the previous event. There is strong near term demand globally.
In the United States processors have been producing less non fat due to a heavy cheese to whey product mix. This has reduced supply of skim and boosted demand internationally. Skim milk powder appears to be gaining momentum and if demand continues pricing should remain stable in the short term.
Butter Fat
Butter fat saw a significant shift with 82 percent butter rising ten percent at the latest auction. Earlier in November prices had dropped by twenty percent but have now rebounded by the same margin. It appears the market has found its floor and buyers have returned to secure volumes.
In the short to medium term outlook US butter is rising and showing signs of improvement. The EU market is also strengthening. Overall butter fat prices are increasing globally and sentiment is much more optimistic for the next three to six months.
Cheese
Cheese is currently the most bearish commodity. In the United States the heavy production focus on cheese and whey continues particularly due to the strong returns from whey. This has resulted in more cheese available on the export market which is keeping prices stable.
Globally supply and demand conditions are balanced and this points to a flat pricing outlook for cheese in the coming months.
Sweet Whey and Proteins
Competition for whey solids around the world has lifted sweet whey prices. Lower supply and solid global demand are contributing to firming prices.
Protein markets remain strong. Prices for WPC and WPI continue to rise as the world maintains an insatiable appetite for protein enriched products. This trend shows no signs of slowing.
Thank you for tuning in to this edition of Inside Track. Look after yourself and one another and we will see you again in a fortnight.
