According to Maxum Foods, one of Australia and New Zealand’s principal dairy suppliers, global market fundamentals remain supportive of prices as northern hemisphere milk production peaks.
Maxum Foods Global Dairy Commodity Update for June indicates that European milk output is expected to grow a little faster, but persistent demand for cheese is limiting the availability of milk being sent to driers. The onset of a warmer summer will lift demand for cream and sustain a tight supply of butter.
The excess of US milk won’t ease quickly with a continuing build in the herd and improving in farm margins, but cheese and butterfat balance sheets will continue to improve as demand from dining-out and ice-cream producers improves.
The shifting demand in the US between consumption channels across cheese types and formats will continue as a complex developing story, given the regional milk growth patterns. This will have a significant impact on competition between cheese exporters, as the future of US cheese indicates tightening availability.
Meanwhile, feed prices have generally eased but remain elevated. This will continue to limit milk growth in the northern hemisphere into the second half of 2021.
Also, elevated commodity prices for fats and WMP will further test demand in the most developing regions where weakness is evident, however firm protein and fat prices won’t let WMP fall too dramatically.
Considering the strong gains in prices since shipments were booked, recent trade data appears flattering given weak comparatives.
Chinese demand, which has dominated recent trade trends, continues to hold the key as its internal market reshapes, which will draw more ingredients, fats and cheese.