As we approach the end of 2020, there is a degree of optimism in global markets that the rollout of the COVID-19 vaccine will mean 2021 is a very different year to the past 12 months. And while there is still plenty of economic uncertainty, hopes are high of a return to normality next year.
This hope is perfectly reflected in the performance of dairy markets in recent weeks. Looking back on it, 2020 has been an incredibly volatile year for dairy prices. At the start of the year, the outlook for dairy prices was extremely positive, with demand set to outstrip milk supply.
However, by mid-April, prices for butter, cheese and milk powders had come crashing down as markets were in panic mode. Yet despite the disruption to the food service industry, dairy prices began to stabilise over the summer months.
And now, as we move into the final days of 2020, the latest GDT auction in New Zealand shows that prices for butter, cheddar and milk powders have made a full recovery and are back at the levels where they started the year.
At this week’s GDT auction, the price of whole milk powder (WMP) increased slightly to $3,210/t (€2,630/t), while skimmed milk powder (SMP) prices increased 1% to $2,930/t (€2,400/t). Likewise, New Zealand butter prices increased 6% this week to $4,220/t (€3,460/t), while cheddar prices were up 4% above $3,890/t (€3,190/t).
Amazingly, this is exactly the level where GDT dairy prices started out in 2020. The recovery is complete.