Market View – Dairy holds its ground

UPFRONT MARKET VIEW

Left: Oceania SMP prices provided the boost to overall SMP prices.

the lifts at GDT. This can be seen by lifting milk powder (WMP) prices were up 2.2% and skim milk powder (SMP) prices were up 3.1%.

However, Chinese buying of WMP was well below year-ago levels. Oceania SMP prices provided the boost to overall SMP prices but European SMP prices did

Dairy holding actually fall at GDT. There is plenty of SMP and non-fat dry milk coming out of the Northern Hemisphere, and these factors indicate possible headwinds that its ground are yet to hit here in Oceania. In the fat side of the market, butter prices slid 1% at the last GDT while

Dairy commodities had a good volatile and it remains uncertain just how more resilient. month in June with prices demand may play out over the Butter is more sensitive to the rising at both Global Dairy next several months. demand from food service, which Trade (GDT) events. The GDT Part of the demand is yet to fully pick back up. price index ended the month at the story recently has been Whilst lockdown highest level it’s been since early April. the easing of lockdown restrictions are easing around There has been some good demand from measures around the the world many food service South East Asia in particular and from world and things starting outlets can’t yet operate at China to a lesser degree. to open back up to some full capacity and the demand

Chinese demand has been growing but degree. at the consumer level is not it faltered below the previous year’s levels This has meant businesses necessarily there either. at the June 16 event. need to refill their supply Amy Castleton. So it’s unlikely that we will see

There have been reports that China pipelines, but this spike in much of a lift in demand for butter has built some stockpiles of milk powder, demand for certain products won’t last any time soon and thus prices are unlikely which may explain why Chinese buying forever and the question is what demand to see much movement either. volumes have fallen below year-ago levels. will look like once things settle again. We’re still in a state where anything

Sentiment seems to be leaning more Oceania milk powders have done well could happen but at this point things positive at present, no doubt buoyed by this month. At the June 16 GDT whole look reasonably positive. anhydrous milkfat prices have been a bit prices for dairy commodity futures on Dairy commodity prices the NZX Dairy Derivatives market, which 7000 are mostly up on month-earlier levels. The increase in prices – both on GDT and futures prices on the derivatives market – has resulted in a jump in the NZX milk price forecast for 2020-21, which in midUS$/tonne 4000 5000 6000 June was $6.62/kg MS. This forecast does 3000 seem high and it’s likely to ease as the 2000 season progresses because pressure does remain on commodity prices. While commodity prices have had 1000 Apr 18 Oct 18 Apr 19 Oct 19 Apr 20 a boost this month, the market is still WMP SMP AMF Butter