Global dairy market overview
Global milk supply continues to expand but the rate of growth is slowing. July flows were +1.1% (est) with cumulative flows +1.6% year-to-date. Milk components are down in both the EU and the US. While global milk supply is slowing, dairy demand – particularly export trade – has been sluggish with high prices and in market stocks impacting. Exports should improve, but there are concerns regards future Chinese buying as trade wars are having a damaging effect on the economy.
Butter output is muted in Europe but volatile pricing is curtailing retail and export demand. Stocks remain tight, but there appears to be more product available compared to this time last year. The cheese market is in balance with strong domestic demand matching supply growth. SMP stocks are being slowly worked through with lower EU production firming pricing for fresh product. Demand for WMP is muted with the availability of competitively priced FFMP affecting demand.
Milk
European fat and protein components have been affected by dry weather. Average milk fat content fell from 3.91% to 3.88% in August.
Cheese
The EDA has indicated that European cheese stocks have reached 450,000t which is higher compared to last year.
Butter
German retail demand for butter fell by -9% in 2017 and has fallen by a further -8% so far this year with higher prices impacting.
SMP
A total of 10,500t was also sold at recent Intervention tenders bringing total stocks down to about 270,000t.
WMP
Cumulative exports from Argentina and Uruguay to Algeria have increased from 12,500t to almost 70,000t so far this year.
Global milk supply snapshot
Flows continue to expand but growth dipped below +2% for five consecutive months (Jul +1.1% est).
US
Growth was weaker in Jul (+0.5%) with heat and tighter farm margins impacting.
Argentina
Collections are recovering compared to a weak 2017 base (Jul +4.1%).
EU-28
Flows continue to increase (Jul +1.4% est) but heat is affecting milk components.
Australia
Flows have fallen for the last two months (Jul -4.2%) as hot weather impacts.
New Zealand
After a poor Q1, flows have increased for four consecutive months (Jul +5.6%)
EU milk supply snapshot
Flows continue to grow but heat affected July components. Milk solids are +1.6% year-to-date.
Ireland
Drought severely impacted July milk collections and components (Jul -3.1%).
UK
DEFRA output figures for July were revised down from +1.5% to +0.8%.
Poland
Growth has slow, but flows continue to hit record levels (Jul +1.7%).
France
After a weak Apr-May period, flows recovered in June and July (Jul +1.8% est).
Germany
Growth has been robust for the past few months with July volumes +2.7%.
Netherlands
Phosphate Regulations continue to affect collections (Jun -1.5%).
Dairy demand snapshot
Overall domestic disappearance is good. Cheese demand has been particularly strong while butter consumption improved after a poor Q2. However, powder usage is weak.
Domestic consumption has been solid with strong cheese demand offsetting weaker powder demand. Butter consumption is under pressure with higher prices impacting.
After an exceptional start to the year Chinese powder imports weakened with trade wars, higher domestic milk output and the weaker economic outlook impacting. Elsewhere, weakness in the South Korean economy may affect future buying.
Mexican demand is strong with solid powder demand offsetting a decline in cheese and butter buying. Venezuelan imports remain depressed with Brazilian volumes weaker across all categories.
Demand increased in Q1 with stable oil prices offering support. However, demand has slipped again with weak economic growth, US sanctions on Iran and Algerian licensing issues impacting.
Powder demand including casein has improved in recent months after a poor start to the year but remains fairly muted. Butter and cheese demand is growing, albeit from a low base.
Farm-gate prices
EU prices increasing after a sluggish H1 period
Feed prices
US feed prices have fallen but EU and NZ prices have spiked.
Fertiliser prices
Prices increased off a low based but have stabilised in recent weeks.
Weather
Summer heatwaves in EU and parts of the US. Conditions more favourable in NZ.
Herd Size & Yield
Herd size has stabilised but yield and components have been affected by weather.
Global Milk Supply
Growth has slowed in recent months (Jul +1.1% yoy).
Global Economy
US economy is strong but EU, UK and Chinese growth slowing.
Import Values
Trade wars and sluggish demand are having a negative impact on buying.
Exchange Rates
EUR is weaker but stable vs. USD, stronger vs. STG and NZD. The Chinese Renminbi remains weak.
Retail Demand
High and volatile pricing impacting EU retail butter sales. Global cheese demand remains solid.
Brent Oil Prices
Brent crude has firmed to $76 with H2 futures around the $75 mark.
Global Dairy Demand
Demand growth weakened after an exceptional Q1 and is growing around +1% at present.
Global quotes and auctions
Published prices changes since last market report (€/t)
Cheddar
€3,325 (Trigona)
€3,375 (GDT)
€2,990 (CME)
EU market has now stabilised. UK can still attain a premium. CME prices remain volatile.
Butter
€6,120 (Dutch)
€4,745 (GDT)
€4,470 (CME)
Rate of decline has eased and market is stabilising. Pricing appears to be converging at €4,000/t.
SMP
€1,590 (Dutch)
€1,740 (GDT)
€1,513 (CME)
Prices remain weak despite the increase in EU exports. CME reflective of global pricing.
WMP
€2,820 (Dutch)
€2,725 (GDT)
N/A
GDT has stabilised despite global demand with fears over weaker NZ output.
Rennet
€4,000 (EU est.)
€4,260 (GDT)
€4,300 (USDA)
EU market has now Strong production has led to stock-build which has weakened pricing. GDT firmed at recent auction.
Global Dairy Market Overview
Global milk supply continues to expand but the rate of growth is slowing. July flows were +1.1% (est) with cumulative flows +1.6% year-to-date. Milk components are down in both the EU and the US. While global milk supply is slowing, dairy demand – particularly export trade – has been sluggish with high prices and in market stocks impacting. Exports should improve, but there are concerns regards future Chinese buying as trade wars are having a damaging effect on the economy.
Butter output is muted in Europe but volatile pricing is curtailing retail and export demand. Stocks remain tight, but there appears to be more product available compared to this time last year. The cheese market is in balance with strong domestic demand matching supply growth. SMP stocks are being slowly worked through with lower EU production firming pricing for fresh product. Demand for WMP is muted with the availability of competitively priced FFMP affecting demand.
Milk
European fat and protein components have been affected by dry weather. Average milk fat content fell from 3.91% to 3.88% in August.
Cheese
The EDA has indicated that European cheese stocks have reached 450,000t which is higher compared to last year.
Butter
German retail demand for butter fell by -9% in 2017 and has fallen by a further -8% so far this year with higher prices impacting.
SMP
A total of 10,500t was also sold at recent Intervention tenders bringing total stocks down to about 270,000t.
WMP
Cumulative exports from Argentina and Uruguay to Algeria have increased from 12,500t to almost 70,000t so far this year.
Global milk supply snapshot
Flows continue to expand but growth dipped below +2% for five consecutive months (Jul +1.1% est).
US
+1.1%
Growth was weaker in Jul (+0.5%) with heat and tighter farm margins impacting.
Argentina
+6.8%
Collections are recovering compared to a weak 2017 base (Jul +4.1%).
EU-28
+1.8%
Flows continue to increase (Jul +1.4% est) but heat is affecting milk components.
Australia
+1.7%
Flows have fallen for the last two months (Jul -4.2%) as hot weather impacts.
New Zealand
-0.6%
After a poor Q1, flows have increased for four consecutive months (Jul +5.6%)
EU milk supply snapshot
Flows continue to grow but heat affected July components. Milk solids are +1.6% year-to-date.
Ireland
-0.5%
Drought severely impacted July milk collections and components (Jul -3.1%).
France
+1.5%
After a weak Apr-May period, flows recovered in June and July (Jul +1.8% est).
UK
+0.1%
DEFRA output figures for July were revised down from +1.5% to +0.8%.
Germany
+2.7%
Growth has been robust for the past few months with July volumes +2.7%.
Poland
+2.7%
Growth has slow, but flows continue to hit record levels (Jul +1.7%).
Netherlands
-1.4%
Phosphate Regulations continue to affect collections (Jun -1.5%).
Dairy demand snapshot
North America
Overall domestic disappearance is good. Cheese demand has been particularly strong while butter consumption improved after a poor Q2. However, powder usage is weak.
South & Central America
Mexican demand is strong with solid powder demand offsetting a decline in cheese and butter buying. Venezuelan imports remain depressed with Brazilian volumes weaker across all categories.
EU
Domestic consumption has been solid with strong cheese demand offsetting weaker powder demand. Butter consumption is under pressure with higher prices impacting.
MENA
Demand increased in Q1 with stable oil prices offering support. However, demand has slipped again with weak economic growth, US sanctions on Iran and Algerian licensing issues impacting.
North Asia
After an exceptional start to the year Chinese powder imports weakened with trade wars, higher domestic milk output and the weaker economic outlook impacting. Elsewhere, weakness in the South Korean economy may affect future buying.
SEA
Powder demand including casein has improved in recent months after a poor start to the year but remains fairly muted. Butter and cheese demand is growing, albeit from a low base.
Farm-gate prices
EU prices increasing after a sluggish H1 period
Feed prices
US feed prices have fallen but EU and NZ prices have spiked.
Fertiliser prices
Prices increased off a low based but have stabilised in recent weeks.
Weather
Summer heatwaves in EU and parts of the US. Conditions more favourable in NZ.
Herd Size & Yield
Herd size has stabilised but yield and components have been affected by weather.
Global Milk Supply
Growth has slowed in recent months (Jul +1.1% yoy).
Global Economy
US economy is strong but EU, UK and Chinese growth slowing.
Import Values
Trade wars and sluggish demand are having a negative impact on buying.
Exchange Rates
EUR is weaker but stable vs. USD, stronger vs. STG and NZD. The Chinese Renminbi remains weak.
Retail Demand
High and volatile pricing impacting EU retail butter sales. Global cheese demand remains solid.
Brent oil prices
Brent crude has firmed to $76 with H2 futures around the $75 mark.
Global Dairy Demand
Demand growth weakened after an exceptional Q1 and is growing around +1% at present.
Global quotes and auctions
Published prices changes since last market report (€/t)
Cheddar
€3,325 (Trigona)
€3,375 (GDT)
€2,990 (CME)
EU market has now stabilised. UK can still attain a premium. CME prices remain volatile.
Butter
€6,120 (Dutch)
€4,745 (GDT)
€4,470 (CME)
Rate of decline has eased and market is stabilising. Pricing appears to be converging at €4,000/t.
SMP
€1,590 (Dutch)
€1,740 (GDT)
€1,513 (CME)
Prices remain weak despite the increase in EU exports. CME reflective of global pricing.
WMP
€2,820 (Dutch)
€2,725 (GDT)
N/A
GDT has stabilised despite global demand with fears over weaker NZ output.
Rennet
€4,000 (EU est.)
€4,260 (GDT)
€4,300 (USDA)
EU market has now Strong production has led to stock-build which has weakened pricing. GDT firmed at recent auction.