Bakers prefer butter, helping prices soar
Consumers around the world are willing to pay more for products containing dairy and this is driving demand for butter and cream, says Fonterra.
The three categories are tipped to reach $17.1 billion in the 2017-18 year versus $16b in the previous year -- up 6.9%.
The top five were picked by IBISWorld in terms of expected growth, by far the highest earner and having the third-highest predicted growth rate behind multi-unit apartment and townhouse construction (9.2% growth) and geothermal, wind and other electricity generation (8.6%).
Samual Johnson, an Australian-based IBISWorld senior industry analyst, told Dairy News the recovery of global prices and increased output from farms are expected to contribute to growth.
“Infant formulas have grown particularly strongly; it is a premium area and a high growth area.
People have been investing in that and exports to SE Asia and China have grown strongly.
“Butter has not had the strongest performance over the past five years but is expected to grow in the current year. Global butter production is also expected to grow strongly this year.”
Recently Fonterra has increased its forecast milk prices so they obviously have a favourable outlook for milk prices in the current season, Johnson says.
“That supports our strong forecast for the year. It is mainly driven by restabilising of the global dairy market.”
If Russia were to lift its embargoes it would shake up the current stabilising of supply and demand and change export routes again, he says.
“But I wouldn’t say either way whether that is likely to happen over the next year or two.”
