Demand responsible for overall increase in world wholesale dairy prices

According to DairyCo, dairy commodity production continues to perform fairly well for the world’s key exporters. Supplies in the US are increasing on the year although the rate of increase is lower than expected. The EU continues to potter along with a marginal increase on 2012/13. Down under, New Zealand are on track for a record breaking milk year which is helping Oceania as production in Australia continues to be hampered by adverse weather conditions.

US butter prices increased over the month by $243/tonne (7%). The US has been experiencing good export opportunities, due to competitive prices. Healthy domestic demand has also helped to support prices. Butter prices in the EU were up by $140/tonne (3%) between November and December, kept firm by stable demand over the holiday period.

Oceania butter prices increased 7% ($283/tonne) between November and December. Stocks are reported to be fairly tight in NZ as milk is diverted towards WMP due to higher returns. Poor Australian milk production has affected the seasonal production of butter. The resulting pressure on Oceania stocks, combined with good export opportunities to Russia, North Africa and the Middle East, has pushed up wholesale butter prices.

Prices for both US SMP and WMP increased by 3% ($142/tonne and $144/tonne respectively) over the month. Global demand and an indication of tight available supply appear to be the reasons for the increase.  EU SMP and WMP prices increased in December by $171/tonne (4%) and approximately $100/tonne (2%) respectively. This occurred despite increased production of powders in the EU, as strong export demand pushed up prices.

Oceania WMP prices increased $167/tonne (3%) on the back of continued strong demand from China, keeping its production focus on WMP production.  Most of its supply is reported to be committed for quarter one. SMP prices also increased 3% ($125/tonne) on the back of firm world demand.

US prices for cheese marginally increased in December by 1% ($33/tonne) on the back of lower than expected US milk production. In addition, trade in the US was limited in December as buyers prepared for the New Year. In Oceania, cheese prices saw a $300/tonne (7%) increase over the same period as domestic demand remained healthy. Supplies are also stretched due to a recent deal to supply cheese to Japan.

 

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