Here is John Hallo in our latest edition of the Inside Track, with a general market update.
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Hello and welcome to Maxum Foods Inside Track. Mid-spring here in Brisbane, jacarandas in full bloom, beautiful weather, what a time to be alive.
But let’s have a look to see what’s happening in Dairy. With a general overview of dairy globally, with the dynamics at the moment, a good supply across the globe. If we have a look at New Zealand, especially in the North Island, it’s been a great start to the season and looking to be a bit of an earlier peak.
Whole Milk Powder
So good production of whole milk, skim, butter. But it looks to see as though, especially on whole milk at the moment, demand is holding up against that heavier supply in the region. So China once again, still the dominant buyers of whole milk powder and again, sort of general bearish sentiment, the market seems to be holding up okay.
Skim Milk Powder
Having a look at skim milk powder globally, we see in the EU with good supply of milk, the skim butter and skim production is quite abundant. Skim is quite flat pricing wise in the EU. In the US still seen the same thing with non-fat as well. A lot of that non-fat is looked to be value added into NPCs etc. So supply is a little bit more balanced out in the US. In Australia and New Zealand, the supply is good. Demand is a little on the wane so, excuse me, we are seeing a reasonably flat to bearish sentiment on skim.
Butterfat
Having a look at butterfat at the moment, it’s a bit of a two tier market globally. If we look over at the US, still some real bearish sentiment, some historical low pricing on the CME and we’re seeing a lot of fat on the export market. So good milk production, good fat percentage in the milk. So we’re seeing excess cream and fat.
So globally, yeah, some real value in US butter. However, on the New Zealand side of things, market seems to be holding up quite well. This is due mainly to Chinese demand for New Zealand specific butter. So that helps hold up that demand.
Whereas it’s US butters not as well received in China. Therefore, yeah, you don’t see that volume swallowed up into North Asia and then over to the EU, yeah, a bearish sentiment over there as well. So yeah, good milk flow, good production, especially out of regions, butter producing regions like Ireland, where supply is abundant and it seems to be, the demand is reasonably flat, so we’re seeing those lower prices out of Europe as well.
Cheese
Have a look at cheese globally, so in the US, in the same vein as Butterfat, production is good, milk flow good as well, so we have a lot more capacity in terms of cheese production in the States coming on board, or that has come on board and continues to come on board over the next 12 months. Cheese production is good, global demand seems a little flat to bearish, so yeah, pricing remains, well value remains pretty good for US cheese.
Similar scenario over in Europe, yeah, the scenario or the dynamics for milk in Europe are a little different to the States where prices are actually, or farm gate prices are on the decline, so it might see a bit of a reduction in milk flow over the next three to six months, so yeah, it’s an interesting dynamic there, milk flow at the moment is quite good, but yeah, just in terms of what will happen over the next six months is a bit of an unknown, so that may decrease supply in cheese and may help correct that pricing.
In New Zealand and Australia for cheese, things are reasonably balanced, still some good demand for New Zealand and Australian cheddar and mozzarella. So, yeah, pricing seems a little bit more bullish for cheese in this region. Obviously, coming up to the Christmas period as well, demand is holding up in the retail and food service sectors. So, a bit more of a positive outlook on cheddar pricing.
Whey & Proteins
Moving across to sweet whey and proteins, I guess it is the shining light in dairy commodities at the moment, the protein sector, demand still really good and supply not as abundant as your fat and skim and whole milk mixes. So there is a real fight for liquid whey, both in the States and EU, as there’s so much value in further value adding that protein into a WPC or a WPI.
So yeah, there’s some good competition for liquid whey, meaning that sweet whey powder production is I guess capped in a way and that helps hold that market up and then on the flip side with just real abundant demand of WPC and WPI globally, we still see those prices at record levels. On a short to medium term as supply is restricted and demand continues, we should see some very healthy prices in WPI, WPC.
Thanks very much for listening to today’s Inside Track. Christmas is only around the corner. Mariah Carey will be on your office radio anytime soon now. So with that comes a pretty frantic time in the freight and logistics world. So for all our customers out there, if you need any assistance with getting earlier orders in, etc., then please call our friendly staff and we’ll look after you guys.
Have a great fortnight. We’ll see you again soon.
