Here is John Hallo in our latest edition of the Inside Track, sharing updates on global dairy markets. In Edition 181, milk and whey protein reach record prices in an otherwise bearish commodity market.
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Hello and welcome to Maxum Foods Inside Track.
Only a couple of weeks away from the start of summer here in Brisbane, the sun is shining good times ahead. Let’s have a look at what’s happening in dairy.
Whole Milk Powder
As an overall summary on the global markets, a real abundance of supply and waning demand is putting pressure on all commodity prices. We saw on the GDT last night that whole milk powder was down just under 2% at 1.9%. It was a reasonably even demand across the board. China was at about 55% participation on whole milk, and other regions were down 1% to 2%. So demand was spread across the board; however, it was weaker than previous GDTs. This is the seventh consecutive GDT where we’ve seen an overall negative result. Whole milk may have performed a little better than futures expectations; however, that burden of supply is really putting pressure on pricing.
Skim Milk Powder and Non-Fat
Not a lot of news there. Things have been reasonably balanced in supply and demand since September. Not a lot of movement on GDT. The US market recently was flat on non-fat, and the EU as well. In terms of short to medium term, it seems to be holding up reasonably well against other commodities.
Butterfat
We did see significant movement on the GDT downwards last night. This is a result of increased volume put on the GDT good volume from Fonterra there on the platform last night, around about 25% up from the event previous to last year. So it shows that butter is in good supply and under a lot of pressure on pricing. When you take into consideration increased fat supply out of the US and increased exports out of the US, it has put a lot of pressure on the global market. EU in similar fashion we have seen more products on the market, more supply, putting pressure across global pricing. We have seen signs of floors in the market on the US side of things. That market ticked up a little bit, which is a positive sign of some strengthening there, and similar to the EU. So in terms of short to medium term focus, with that support on pricing in US and EU, we may see New Zealand–Australian pricing pop up as well.
Cheese
In the EU we have seen some positive signs. That market has been reasonably bearish in the last two to three months. We have seen some good pricing out of the EU, so perhaps that market has seen a floor. In the US, the CME still seems reasonably bearish. Some good milk and positive milk results in the US are attributing to an increase in supply and exports. In New Zealand and Australia, quite a flat market. Obviously, we are heading into some good demand conditions across retail and food service for Australia and New Zealand. So we are seeing a more balanced market here in Australia.
Whey and Proteins
On the sweet whey side, not a lot of action still a reasonably balanced market and flat pricing. Looking at proteins, it’s a similar story. It is definitely the champion of dairy products at the moment. That insatiable demand across the globe continues. We’re seeing bigger quick-service restaurants or chains like Starbucks introducing new protein-infused products into their repertoire. Across the board, we’re seeing good domestic demand in the US and globally, which is swallowing up a lot of product and keeping pricing firm.
Thanks very much for listening to today’s Inside Track. Remember, on Friday is the first day of the Ashes Test Australia vs England over in Perth. There will be five days there hopefully, in a five-test series. So yeah, cannot wait. I’m sure everyone else is excited too. We’ll see you again in a fortnight.
