According to Ornua, global milk collections increased at a faster rate in February compared with January.
While flows were weaker in Europe, this was offset by strong flows in the US, Oceania and South America. The prediction is 2021 milk flow will grow by 1.0% to 1.2% this year.
Milk supply in Ireland was anything but weak and some processors saw exceptional (+15%) milk supply increases in March 2021. However, Ireland is the EU outlier.
On the demand side, dairy was boosted by Chinese buying post-Christmas and strong retail demand, which continues to offset weaker food service sales. As a result, dairy commodity prices rose steadily through the first quarter.
Dairy commodities have stabilised in recent weeks. Buyers have become more cautious as we approach peak milk season against a backdrop of new, extended lockdowns and, in some cases, no lockdowns.
However, market downside risks remain. Retail demand should remain strong in the near-term, with the gradual easing of restrictions continuing to create demand spikes as food service buyers re-engage.
Demand from north Asia continues to set the pace. Food security concerns, combined with a rise in consumption of fresh dairy produce, means Chinese dairy imports are exceeding expectations.
There was some see-saw movement in butter prices in the last few weeks, but now traders are saying outlook is more positive than negative. Butter is important for Ireland through peak.