When will global milk production hit a tipping point?
With global milk prices falling, the question is when will key exporting countries reach a tipping point where production starts to dip.
US-based RaboResearch dairy analyst Tom Bailey says the increase in the latest GDT does not come as a total surprise as the economy begins reopening and government support mechanisms take effect, spurring demand and helping to balance out the market.
The GDT price index rose 1% compared to the previous event.
Last night’s auction also saw North Asian and Southeast Asian demand (which accounts for nearly three-quarters of total volumes) remain relatively flat compared to the last event. Buyers from the Middle East and Africa, and Latin America all had increases, to the tune of 20-50%. North American buyers were absent and European demand declined significantly, reflective of the oversupply of SMP rapidly developing in both markets.
Whole milk prices slipped 0.5%.
Bailey says with over 10,000 MT on offer, it demonstrates that global demand for New Zealand WMP remains stable.
Cheese prices meanwhile slipped by 6%, a reasonable move given cheese has been one of the hardest-hit dairy commodities due to the closure of so many foodservice restaurants throughout the coronavirus lockdowns.
Lactose demand had the greatest uptick in price 15.6% to $1,341MT, the highest price since 2014.
Bailey says give lactose’s wide array of applications, it is difficult to pin down an underlying driver, but given that it is a key ingredient in IMF as well as pharmaceutical uses it is reasonable to assume that concerns around food security may be driving its price support.
Key results
AMF index up 2.7%, average price US$4,079/MT
Butter index down 1.9%, average price US$3,803/MT
BMP not offered
Ched index down 6.0%, average price US$3,864/MT
LAC index up 15.6%, average price US$1,341/MT
RenCas index down 1.9%, average price US$8,719/MT
SMP index up 6.7%, average price US$2,549/MT
WMP index down 0.5%, average price US$2,677/MT
