Here is John Hallo in our latest edition of the Inside Track, sharing updates on global dairy markets. In Edition 180, John covers strong milk supply globally along with soft demand has led to bearish market conditions.
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Hello and welcome to Maxum Foods Inside Track, only 50 days till Christmas would you believe, the year has flown by. Just a reminder to all our customers, it’s obviously a very busy time logistically. A lot of trucks are on the road, and our warehouses are busy as well. Please get your orders in as soon as you can so we can get that product to you on time and in full.
Let’s have a look at what’s happening in the dairy industry. There is an overall bearish sentiment across the globe in dairy markets at the moment. If we look at the four major areas—South America, the EU, North America, Australia, and New Zealand—all have positive milk growth, so supply is healthy. When you look at the demand side globally, demand has been soft. All of these factors are contributing to a decline in pricing across most major commodities.
Full cream milk powder
Full cream milk powder was down 2.7% last night on the auction, mainly due to what I mentioned earlier: New Zealand had a great start to the season with strong milk growth, so supply has been healthy while demand has been waning, particularly in the bigger markets of North Asia. There was a lot of buying earlier in the season, so earlier supply was quickly absorbed at auctions. However, those markets have now aligned, and their supply chains seem reasonably full. This has led to a slide back in demand from North Asia, contributing to softer prices.
Skim Milk Powder
Skim milk powder had little to report—flat results last night on the GDT. There is abundant supply in the EU and US for non-fat products. So supply is healthy, demand is soft, and the outlook for skim remains reasonably flat.
Butterfat
Butterfat continues its gradual decline from its peak on the GDT back in June of nearly 8,000 US dollars for butter. We saw another negative result last night. There has been an abundance of cream in the US and EU, so butter volumes have been plentiful on the export market. In the US, pricing may have found its floor. The recent government shutdown has caused some disruption to demand, but once that is resolved, we might see an uptick in demand and stronger pricing. In the EU, things remain bearish. In New Zealand and Australia, short- to medium-term pricing looks flat.
Cheese
Cheese markets globally are similar to butter. In the US, CME pricing has been quite flat, signaling bearish conditions due to good supply and soft demand. One thing to watch in the US is the re-engagement of food programs in schools after the government shutdown, which may increase demand and correct the market. In the EU, signs remain bearish for cheese varieties like mozzarella and gouda. In Australia and New Zealand, conditions are more bullish with Christmas approaching. Production has been steady, and demand has been strong, so Australian cheese pricing is holding up reasonably well.
Sweet Whey and Proteins
Sweet whey and proteins are seeing some interesting dynamics. Liquid whey has become competitive to source, and as processors look to add value through WPC and WPI, supply of sweet whey may tighten, potentially driving prices up in the short term. Proteins continue to perform strongly, with WPC and WPI in very good demand. In particular, WPC is seeing shortages in supply from the US, which is driving the market. Short- to medium-term outlook for proteins remains bullish.
Thanks very much for listening to today’s Inside Track. Look after yourself and one another, and we’ll see you again in a couple of weeks.
