Here is Fraser Macdonald in our latest edition of the Inside Track, sharing updates on global dairy markets. In edition 188, geopolitics and reduced offer volumes spur on prompt buying at the Global Dairy Trade event 399.
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A Strong Week for Global Dairy Markets
Welcome to this edition of the Inside Track. It has been a busy week geopolitically and global events continue to influence commodity markets in real time. This week is no exception. With uncertainty still present in the Middle East, markets remain alert and we will continue monitoring how this impacts upcoming GDT events.
Despite the backdrop, the latest GDT delivered a bullish result with the index up 5.7%. A smaller offer pool of around 4,000 tons intensified competition and highlighted the urgency for prompt shipments. As New Zealand begins its seasonal milk decline many buyers appear to have stepped in to cover their next four to five months of requirements.
Let us take a closer look at how each commodity performed.
Fats: AMF and Butter Lift Strongly
Both AMF and butter delivered stronger than expected results.
- AMF rose 5.7%
- Butter increased by 6.1%
Recent activity suggests that US and European butter prices are also moving higher. Where these markets once competed closely with New Zealand butter that may no longer be the case. For buyers still holding open positions now could be an opportune time to secure butter volumes.
Full Cream Milk Powder
Full cream milk powder jumped 4.5% which was almost double the predicted rise. The increase was consistent across all contract periods. This shows that demand is not only short term but remains steady across the next several months.
Skim Milk Powder Leads the Auction
Skim milk powder was the standout performer with a significant 9.1% lift. Contract one for short prompt shipments was even stronger at 10.7%. This points to uncovered short term requirements and heightened urgency in the market.
As butter prices move higher skim tends to follow. This could be a good time to cover any remaining positions.
Cheese: Cheddar and Mozzarella Strengthen
Both cheddar and mozzarella tracked upward along with the broader GDT trend.
- Cheddar increased around 4%
- Mozzarella rose almost 8%
Demand for dairy proteins remains strong and continues to support these categories.
Dairy Proteins: WPC and WPI Remain Tight
The upward pressure on whey protein concentrate and whey protein isolate continues. Prices are still rising and availability remains challenging. Longer lead times are being reported out of America and Europe and shipping delays linked to the Middle East situation are expected to prolong timelines further.
Global demand continues to exceed supply. New cheese manufacturing infrastructure in the United States may boost future WPC 80 production but this will take time. For now buyers with requirements should be planning further ahead and considering contracts that extend toward the end of the calendar year.
As always we will keep monitoring these markets closely and keep you informed. If you need to secure dairy proteins or fats now is a good time to review your positions and speak with us.
That wraps up this edition of the Inside Track. Thank you for joining us and we look forward to seeing you next time.
