Here is John Hallo in our latest edition of the Inside Track. He covers whole milk powder’s 5% GDT drop, softer SMP and fats, steady cheese, and strong global protein demand. With spring in full swing, supply is strong but market dynamics remain finely balanced.
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Hello and welcome to Maxum Foods Inside Track. Here we are, first week of September. Spring is here, footy finals just around the corner, flowers in full bloom and most importantly in our industry, it’s milk time for New Zealand and Australia. Let’s have a look to see what’s happening in the dairy industry.
Having a look at whole milk powder, so we saw that -5% result last night on the GDT. This was in line with futures expectations and quite some bearish sentiment around whole milk over the last two weeks. On the demand side, we saw the Middle Eastern and Southeast Asian buyers decrease in demand and but however this Northern Asian market was still quite strong. Supply side a really good start to the season over in New Zealand, so some good milk supply, some good whole milk powder production. So supply strong demand a little on the wane in some markets, meaning that decrease in price. In terms of a short to to medium term outlook, North Asia is still buying, so there is still good demand there. It’s just a question whether these other markets, come back into the fold. If that demand does pick up, then we should see a more balanced market. However, yeah, supply conditions are very good in New Zealand.
Moving across to skim milk powder. So last night we saw that negative result which was yeah, probably a long time coming for skim. It has surprised us over the last six months how pricing has held up. However, yeah, finally that dynamic in in supply and demand did see that shift in in price overnight. In terms of short to medium term, yeah, we it is a reasonably bearish sentiment on skim milk powder as that butter production and skim in New Zealand continue will increases over the season. We will see good supply and yeah, demand will have to pick up for it to improve in pricing.
Having a look at butter fat, so if we look on a global scale in the EU, some good supply and good milk flow in the EU over the last two months has resulted in, yeah, good fat supply and demand a little on the wane over the holiday season. So prices have decreased in the EU, in the US. Yeah, as we discussed 2 weeks ago on the Inside Track, some real abundant fat supply out of the US which has seen a lot of product on the export market which has put pressure on global butter fat pricing. This looks to continue in the in the short term. If you look at New Zealand, Australia, the GDT last night we saw a -2% result on butter and AMF which was a little more, a little bit more encouraging than first thought. There was some bearish sentiment around this GDT with Fonterra putting a lot more volume on the C2-GDT last night. So it demand did hold up quite well, so which would mean that butter is still reasonably firm for Australia and New Zealand.
Having a look at cheese, so cheese is a hard one to read at the moment. Good supply out of the States however, pricing is holding up in the EU, a similar situation. Australia, New Zealand, yeah, there’s a few question marks over the supply and demand dynamic. We’re seeing pricing relatively stable. There’s not a lot of demand, but things seem to be to be quite steady. So yeah, a hard one to read, as I said, it looks like a reasonably flat market leading into the Christmas season.
Finishing off with whey and proteins. Whey is still quite a quite a solid market, some good demand in China for EU and US product. So we do see you know some continued demand there holding pricing up for sweet whey on the protein side, not a lot of change. The US still really struggling to keep up with supply both domestically on the export market. So those prices for WPC and WPI remain high. EU WPI still in hot demand as well as WPC. So globally, yeah, demand still outstripping supply and meaning hot, pretty high prices.
Just a reminder that the Maxum Foods team will be down at the Sydney Fine Foods next Monday the 8th through to Thursday the 11th. So, look forward to catching up with you all out and about in Sydney. Thanks very much for listening to today’s Inside Track. Have a great fortnight, look after yourself and one another.
