Dairy markets are traditionally in the weakest period (July to August) for purchasing of dairy commodities, so the fact that prices are steady is positive.
There was no Global Dairy Trade (GDT) auction this week (next one on 3 August), so while there have been decreases in price, as a rule there has been good Chinese activity at the GDT and hence this brings confidence to the overall picture.
Cheddar cheese is the one product that probably hasn’t experienced the same lift in price that we have seen in other commodities.
However, it is gradually strengthening and a strong run at retail sale on the back of reopening food service outlets across the world will further strengthen it .
Powders have weakened over the past six weeks and butter has come under pressure, but the changes are marginal, so little overall change is expected.
Industry experts suggest, as COVID-19 related restrictions are eased and more normal demand returns, that this is what will set the dairy demand for the autumn.
The hangover from COVID-19 is still an issue in terms of logistics and moving product around the world, so a complete return to buying strategies as they were pre-COVID-19 isn’t on the cards.
As New Zealand milk begins to flow (especially on North Island), industry analysts expect a strong milk price season, with farmgate prices to hold near the forecasted NZ$8.00/kg milk solids.
Meanwhile, increased numbers of COVID-19 cases across southeast Asia have fuelled enough uncertainty to slow dairy buyers.