Coronavirus causes ‘unease’ in the global dairy market
As the coronavirus continues to spread rapidly in China, it is bringing an element of “unease” around the global dairy market – during recent weeks.
This is according to Peter Meehan, senior commodity analyst at INTL FCStone, who AgriLand caught up with yesterday, February 11, to see what sort of impact – if any – he is seeing the virus having on global dairy trade.
INTL FCStone is a multi-national financial services firm that trades globally in all asset classes.
Speaking to Peter, he said: “There has been an element of unease around the global dairy market in recent weeks.
Fears over the effect of coronavirus on Chinese demand for dairy products are providing demand-side concerns.
“Meanwhile, the impact of excessively dry conditions in New Zealand’s North Island has caused some supply-side concerns there.”
He added: “The European butter quotation saw its first, albeit slight, year-on-year decline in four weeks last week; while the European skimmed milk powder (SMP) quotation saw its first week without a gain since the start of the year – holding unchanged.”
Last week’s global dairy trade (GDT) auction – in New Zealand – also reflected this unease in the market, he noted.
Whole milk powder (WMP) declined by 6.2%, SMP by 4.2% and anhydrous milk fat (AMF) by 4.5%; bringing overall prices down by 4.7%.Also Read: GDT index tumbles in third auction of 2020
Commenting on this fall in prices, Nate Donnay, director of dairy market insight at INTL FCStone, stated:
“Fears about coronavirus reducing global dairy demand certainly drove the drop in powder prices at last week’s GDT; but prices didn’t fall as far as feared.
Since the auction we’ve seen powder prices in the US bounce higher and some slight firming in spot prices in the EU.
“Coronavirus continues to spread, but a combination of supply concerns in New Zealand and traders waiting to get a feel for actual demand impacts are keeping prices from falling further,” he concluded.