Dustin Boughton, procurement director at Maxum Foods, said the European and Oceania markets remain a positive short-term outlook due to persistent dairy demand in major EU domestic cheese and butterfat markets, and strong import demand from China.
The global COVID caseload is reducing as movement restrictions take hold, he added, noting that the rollout of vaccines is reinforcing control of the pandemic in the developed world.
“Despite risks of variants and vaccine deniers, societal immunity and return to COVID-safe normality will be achieved over the coming months,” Boughton said.
The tight global market situation is being helped by slowing global milk supplies, despite a wall of milk in the US, Boughton said. EU-27 milk growth has slowed to near flat and will remain sluggish in the coming months, and New Zealand late-season poor rainfall continues. Solid domestic cheese demand in the EU is limiting production of ingredients and minimizing cream surpluses.
The Oceania market has been buoyed by the continued strength of the rally in GDT prices, which had extended to seven increases in the index by the second February 2021 event, lifting average prices by 56% since September, he added.
Chinese buyers dominated purchases of WMP, SMP and butter as the economy gradually returns to normal.
“Current EU and NZ commodity values are meeting resistance in developing markets and coming GDT events will be compelling viewing,” Boughton said.
“Butterfat trade has been generally weak at much lower prices than these while WMP is testing tolerances. Cheese trade has been brisk and competitive.”
He concluded US exporters will seek to take advantage of weak domestic prices to attract improved exports (if ports are working) across commodities except whey powder, with a glut of milk and weak domestic cheese demand due to the pandemic. A further phase of government support may further influence markets when details emerge.