The Outlook Blog

What we're seeing - 20 June 2018

This week we’re sharing some insights from the latest edition of our Global Dairy Directions Trade Insights report, which includes data to April.

There was certainly an uptick in dairy trade in April, as buyers filled pipelines with low-priced commodities. In milk solids equivalent terms, trade increased 11.5% for the month. SMP was the stand-out again in April increasing 20%. For the 12 months to April, exports reached a record high, while averaged shipped prices were the lowest in many years. EU SMP exports increased for the 14th consecutive month in April, while US exports strongly, increasing for the 5th consecutive month. WMP was also well up in April, the fifth consecutive month of trade expansion.

Buyers in SE Asia and MENA have led the activity in milk powders, rebounding from a quiet period late last year. Chinese trade also recovered to improve the overall picture. The heightened activity indicates well-stocked buyers are anticipating higher prices later in the year, and could be increasingly cautious in the later months.

Chart of the week

US dairy markets weakened in reaction to the inclusion of dairy products on the list of products hit by retaliatory Chinese tariff increases this week, layering on challenges of recent higher retaliatory duties into Mexico. Barrel cheese prices have slumped to less than US3,000/t in overnight CME trading, in reaction to the expected shift of production away from Mozzarella, a key export in Mexico – less so to China. The Chinese cheese market for the US was about 17,000t in the past 12 months, compared to 115,000t in Mexico. Sentiment seems to indicate the industry thinks the trade situation will get worse before it gets any better.

After enjoying stronger prices due to tighter availability, whey powder prices have fallen in futures markets. China is the largest US market for whey powder and has enjoyed strong demand growth in the past year.  

This is our take on what’s happening in Australian, New Zealand and global dairy markets based on our weekly Dairyglobe newsletter. Interested in subscribing to the Dairyglobe? Contact our office on or +613 8414 0904 or read more here!

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