The strong global demand for dairy fats keeps Butter prices firming [News Oceania n°9/2018]

Period: April 16 – 27, 2018

While in Northern Australia recent rains have made pasturing more available, in Southern Australia the current season continues to be hot and dry. This has led to more late season feed purchases by some producers and to a greater need to irrigate. These added costs factors are weighing on decisions for the coming season, as to whether or not to increase herd sizes.

New Zealand Milk production in March 2018 was -1.48% lower than in March 2017. In the first 10 months of the current season, which began in June 2017, milk production recorded -0.33% compared to season 2016-17.

About recent stormy weather, the worst has been around the upper North Island where there is not much dairying in the overall scheme of New Zealand.

New Zealand dairy processors are pleased by stronger commodity prices. Continuing strength is expected in coming weeks, perhaps months.

The strong global demand for dairy fats is helping keep Oceania Butter prices firming. With New Zealand the largest Butter exporter and in the declining period of seasonal milk production, Butter price strength in Oceania is widely expected during coming months.

SMP prices in Oceania are slightly higher. Demand is strong for current production. Much of current production is committed, making available spot supplies more expensive.

Also WMP prices are higher. Continuing firmness is expected in the coming weeks. Many Buyers are very interested in locking in commitments from preferred sources.

The need to keep milk flowing to WMP and Butter to meet contract commitments will keep Cheddar production at a level that is expected to continue price strength.