While most other dairy commodities have experienced a volatile year to date as a result of COVID-19, casein prices in contrast have performed strongly in the first half of 2020. Normally quite steady, casein markets took off in March and April as buyers began to worry about supply shortages in key exporting regions.

In New Zealand, which is the largest exporter of casein to world markets, milk production slowed dramatically from March onwards due to drought conditions. At the same time, the COVID-19 pandemic began to hit Europe (the other major producing region for casein) and there were major concerns over what the virus could do to milk production.

Images of farmers dumping milk in the UK and incentives for farmers in France not to produce milk led to real fears that European milk production would be down sharply during the spring months. As a result, buyers began to worry that casein availability would reduce sharply this year and prices soared as a result.

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In the first quarter of the year, prices for rennet casein shot up 25% to rise above €9,000/t, while acid casein prices gained 15% to reach €8,200/t (see graph).

When compared year on year, rennet casein prices were a massive 84% , or €4,100/t, higher than they were in April 2019, while acid casein prices were almost a third (+31%, or €1,900/t) higher than they were at the same time last year.

Prices for both rennet and acid casein have since come back down to earth in June and July after it became clear that the worst case scenario for milk production in Europe was not going to happen and product availability would hold up. In saying that, prices for both products are still higher than they were at this time last year.