A seesaw international dairy market where there is a strong retail trade for dairy products but a stop-start food service trade is making dairy buyers hard to predict.

Some buyers are actually stockpiling dairy product in anticipation of a second or third wave of COVID with good value in the market.

On the other hand, some buyers are reluctant to buy long in anticipation of lower prices in the autumn. Ornua’s Colin Kelly suggests dairy demand 2020 will be down between 5% and 10% as retail is strong but not very strong.

Food service buying is stop-start depending on rolling lockdowns around the world.

Purchasing power

Retail buying has been the saviour of the sector and that retail purchasing power is the hope and outlook for the next couple of months.

China has been busy buying in the market of late and has kept a floor to the GDT auction results, with some experts suggesting China could be building stocks.

On the downside, dairy trade in Africa, South Africa and the Middle East is very difficult.

Nigeria, with a population of 200m people, is a huge importer of dairy product, and oil revenue makes up 50% of the country’s revenue so purchasing power is on the floor.

Kelly said: “A country like Nigeria needs to be selling 2m barrels of oil per day at $70/barrel, and, currently it’s restricted to 1.4m barrels at $40/barrel.”

Watch the full interview here between Colin Kelly, Ornua and Lorcan Allen.

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