So the mood music is pretty much unchanged on dairy markets. While there are more red arrows (price reductions) for some global dairy commodities, overall the size of the red arrows is not significant – the percentage change is small. Markets are steady.
Prices for the key commodities are between 15% and 25% ahead of where they were this time last year. There is some optimism also as the food service sector begins to reopen, which will help product mix for some processors. Warm weather also helps for some products that have higher margins for processors.
Whole milk powder is a key product for those trading large volumes and a key indicator of where global dairy trade is.
If we look at prices in Oceania, prices are back a shade this week by 1.5%, but remain 28% up on the same time last year.
If we look at German prices for whole milk powder (WMP), the price is back 2.8% on previous month, but 21% ahead of this time last year.
The same trend holds for the majority of other products that are important in the trade space.
Skim milk powder (SMP), WMP and cheddar are all at four-year highs for this time of year. Butter is the exception, as sky-high prices in 2018 means current prices are back on what was achieved in 2018, but still very positive compared to more normalised pricing.
In summary, EU commodity dairy prices have been above average for a significant period of time.
As global milk supplies increase against a backdrop of uncertainty regarding the pace of food service reopening some commodity prices have eased. However, there are no big head winds on price implications for rest of 2021.