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Supply and demand are the big drivers of milk prices whether we like it or not. This is especially the case for countries such as Ireland that are exporting the majority of product.
The stats on EU supply show no major growth from the big players France and Germany.
French June supply was back 0.8% and German June milk supply was back 0.1%, but total supply year to date is up 0.4%. The UK is down 1.1% year to date.
Supply wave
In the US, June milk supply was stronger than expected, as higher prices pushed production (+0.5% year on year).
New Zealand and Australia are just starting supply, so no big push from that side of the world. So, in summary, no big supply wave when you take a snapshot of the world.
On the positive side EU retail sales are strong
On the demand side there is more a mixed story. On the positive side EU retail sales are strong.
North American butter and cheese sales improved in May and June, but food service is slow to return. Asia is stronger than anticipated.
On the negative side of demand is the Middle East, where regional trade is down 33% year to date. Purchasing power here has been affected by low oil prices and weaker currencies.
African trade is down about 30% year to date, again driven by weaker powder demand.
Summary
In summary, depending on where your co-op is selling product and the type of product, you could make a case for a period of unstable market conditions.
If your co-op is dependent on selling a lot of powder to Africa, it could be tricky. If your co-op is selling into China and maybe a lot of product through Ornua, then you could expect a stronger return, with less impact of COVID-19 on sales.
In summary, supply is nothing exceptional, but a tightness on demand in parts could affect your co-op.
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