According to DairyCo, global wholesale milk markets moved down further in May as milk production in the Northern Hemisphere reached its peak, and deliveries on the whole performed well in relation to year-earlier levels. Buyers in the global market continued to purchase only for short-term cover in anticipation of further price reductions.
While the trough in the Southern Hemisphere is in its last part, there is some concern over an El Niño weather event from July. If this impacts Oceania milk production, especially in New Zealand, then there may be some upward pressure on wholesale prices later in the year.
Contrary to the general trend, US average butter prices increased 6.5% on the month to $4,514/tonne, although reports suggested prices started to fall in the latter stage of the month. Demand is reported to be firm with limited available stocks. While production has been reported to be increasing allowing for manufacturers to build stock levels, export volumes are up, keeping domestic markets tight.
EU butter prices continued to decrease over the month, falling to $4,708 (down 3.5%). Although demand within the EU improved due to various spring holidays, which provided some upward pressure, buyers still seem to be anticipating further decreases with strong milk production levels.
Oceania butter prices reduced $150/tonne (3.7%) to $3,950/tonne in May. Prices have fallen due to a decrease in demand, with Russian buyers all but out of the market and Asian butter trade limited. Butter production is reported to be concentrated on current orders, both domestically and internationally while milk production is in the trough, providing some support for prices.
The average price for Skimmed Milk Powder) SMP in US markets fell to $4,138/tonne (down $314/tonne or 7.0%). Increasing US supplies as well as limited export demand placed downward pressure on prices.
EU SMP prices fell 5.5% (down from $4,188/tonne) to $3,958/tonne. SMP production continued to remain robust through May as milk flows remained strong. Buyers have ventured back into the market although just to cover short-term requirements, while longer-term commitment remains quiet.
Average SMP prices in Oceania decreased 8.0% between April and May to $3,963/tonne. The large decrease is due to a combination of increased product availability coming out of the North Hemisphere and manufacturers making inventory adjustments before the end of the financial year.
The average US Whole Milk Powder (WMP) price for in May was recorded as $4,638/tonne, a reduction of 1.8%. The same situation is occurring with US WMP as with SMP; healthy production and limited market demand.
EU WMP prices also fell over the month, down $275/tonne (5.6%) to an average of $4,625/tonne. Trade is reported to be fairly quiet with the bulk happening internally. Export interest is weak as further reductions to international prices have restricted the competitiveness of EU product. Production of WMP is largely limited to orders already placed.
Oceania prices for WMP fell to $4,075/tonne (-6.3%) in May. Like with SMP, manufacturers are reported to be discounting prices in order to clear out stocks before the start of the new Southern Hemisphere milk year.
US Cheddar prices declined over the month by 7.8% to $4,785/tonne due to increased production combined with steady domestic demand and a slowdown in export interest.
In May, Oceania Cheddar prices reduced to $4,617/tonne (down 5.3%) on the back of limited export trade. However, reports suggest prices increased in the latter parts of the month as Cheddar production became more limited.