The outlook is mixed across major commodity products at a regional level. Weather will strongly influence the availability of commodities in the coming months – whether EU has another hot-dry summer; NZ has a regular spring to create strong incentive for additional milk output at attractive farmgate prices; and the full effect of wet conditions in the US corn belt becomes known.
Skim Milk Powder
Skim milk powder is highly sensitive to availability. While fundamentals look good based on improving stock turnover, a large volume of product has moved downstream and may weaken demand in H2-2019. Producers simply can’t sustain supply at the pace seen in the last 6 months.
Whole Milk Powder
WMP will gradually weaken as buyers look for direction from the NZ season while the ongoing requirement from China clearly holds the key to balancing the market.
Slow falls in EU fat prices are likely to continue as demand remains fragile, while butter availability is likely to remain adequate in H2-2019. Oceania prices have defied fundamentals and come back towards reality, while the US butter market will remain ring-fenced despite presenting with opportunities for importers.
Cheese markets in the EU will stay firm with tight milk supplies, while US cheese prices will also stay firm with ongoing with tight cheddar supplies and improving demand. Removal of Mexican tariffs will aid US confidence.
Smaller animal feed demand in China and SE Asia due to ASF. US whey powder market has slowly recovered. EU prices pulled lower with weaker overall demand. Improving WPC-80 markets as supply slows.