Global milk supply turned weaker in September. This was the first time flows have fallen since 2019 and was driven by weaker collections in Europe, Australia and New Zealand.

Ornua suggests that it now looks unlikely that global supply growth will exceed +0.5% in the second half of the year and the full-year growth estimate has been revised down to +1.1%. However, collections measured in milk solids are stronger.

Urgency

The buying on dairy commodity markets has been boosted by a sense of urgency among buyers to secure product against a backdrop of weaker milk supply and concerns over supply chain disruptions.

European cheese, butter, skim milk powder and whole milk powder prices all recorded significant gains in recent weeks, while the casein market remains stable to firm at a high level.

GDT firms

The GDT auctionalso firmed, while futures are generally indicating that prices could remain stable at current high levels through quarter four and into next year.

The major downside factors on prices are largely demand-related and are unlikely to impact until quarter one of 2022 at the earliest, if they do at all. These include a potential slowdown in Chinese buying, demand burn-off at higher prices and in-market stock build.

The US milk supply numbers also show a decline compared with where they were earlier in the year.