Lower milk production supports prices [News Oceania n°6/2020]

Period: March 2 – 13, 2020

Australia+0.5% Milk production January 2020 y-o-y

In Australia, milk production has been steady in recent months, with rainfall offsetting the impact of dry conditions in many regions and helping to check higher feed costs.

In January 2020, New Zealand milk production was down 0.7% compared to January 2019. Although the rain of the last weeks, the drought continues to be a problem for New Zealand dairy producers. The Agriculture Minister of New Zealand has now expanded drought classifications to more regions, leading to government assistance in affected areas.

Price of Dairy Commodities 

Butter prices are increasing in Oceania. The spread of Coronavirus does not seem to have slowed exports, considering that most Butter exports go to countries other than China. The prices are supported by the seasonal decrease in production. This trend is confirmed by the last Global Dairy Trade (GDT) event of March 17, which has recorded an increase of 0.3% for Butter and 1% for AMF.

Butter manufacturers are trying to fill orders, with the aim of building inventories for the next few months, where the production will reach the seasonal minimum.

Cheddar prices are decreasing. Buyers are currently well stocked and contracted for coming months. Slowed north Asian buying related to coronavirus is not believed to be much of a factor in this market. Cheddar production is simply a bit ahead of current demand. The last GDT event of March 17 has recorded an increase of the average Cheddar price of 2.6%.

Milk powder prices are decreasing in Oceania. The Coronavirus impact keeps slowing the demand of SMP and WMP from North Asia and China, and slowing Oceania’s export consequently. The results of the last GDT event confirm the decrease of milk powder prices, respectively -8,2% for SMP and -4.2% for WMP.

CLAL.it - Comparative overview of SMP prices

CLAL.it – Comparative overview of SMP prices

Uncertainty prevails on the market, the question is whether the lower export of SMP and WMP of (?) the last months will be compensated, once the normality returns.

The seasonal decrease in production that we are recording in Oceania could contain the diminish of milk powder prices. 

CLAL.it - GDT of March 17

CLAL.it – GDT of March 17

– Dairy season: July, 1st – June, 30th (Australia), June, 1st – May, 31st (New Zealand);
– Source: USDA summarized by the CLAL Team

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The CLAL.it team is composed of young people who with the help of Computer Science study the dairy market and develop tools to provide the Operators of the dairy sector with a comprehensive real-time view of the national and international market trends.

Posted in News Oceania EN, Oceania_