EN 中文 DE FR عربى

Dairy Market Sees Price Surge Amid Production Declines and Rising Demand

World 17.06.2024
Source: The DairyNews
484 EN 中文 DE FR عربى
The Global Dairy Trade (GDT) index experienced continuous increases across events in May and the first one in June. Event 357 in June recorded a 1.7% price index rise, following a 3.3% surge in event 356 and a 1.8% rise in event 355. Prices for key products such as whole milk powder (WMP), skim milk powder (SMP), butter, and anhydrous milk fat (AMF) all saw upward growth across these events.
Dairy Market Sees Price Surge Amid Production Declines and Rising Demand
freepik.com
This rally reflects the impact of lower volumes offered and sustained demand from the Middle East and South East Asia, along with occasional resurgences in North Asian buying.

Adding to market dynamics, the SGX-NZX Dairy Derivatives market experienced a record trading month, with 88,834 lots traded in May, 13% above the previous record set in August 2023. Average open interest across the dairy suite reached a record high of 149,823, and SMP futures hit a record 32,416 lots. Heightened price volatilities in milk powders drove the increase in trading volumes across futures and options contracts. Options trading volumes surged 365% month-on-month, predominantly in WMP put options with strike prices ranging from $2,700 to $2,900, for expiry in Q3-Q4 2024. Given that the June 2024 WMP contract is currently trading at $3,440, this indicates a bearish sentiment for WMP prices later in 2024. As New Zealand approaches the end of its production season, seasonally low milk production is causing WMP supply to tighten. The futures curve is currently backwardated, with front contracts trading at a premium until 2025.

New Zealand’s milk production for April showed a decline, with total milk collected at 1,463,000 tonnes, down 4.1% year-on-year (YoY). On a milksolids basis, the drop was 2.6%. Despite this, the season-to-date production is down only 0.5%, with a 0.8% increase in milksolids. The NZX milk production predictor has estimated a 5.7% YoY drop for May. The NZX farmgate milk price forecast for the 2024-25 season was revised on June 6 to $9.09/kgMS, reflecting recent GDT results, while the forecast for the 2023-24 season closed at $7.80/kgMS.

In other regions, milk production has not grown as initially expected. The U.S. reported a YoY decrease of 0.4% in April. Argentina and Uruguay faced significant production drops in April, with decreases of 16.2% and 6.6% YoY, respectively. Europe reported a modest 0.8% increase in March production, while Australia saw a 2.5% YoY increase in April, continuing its recovery with a 3.0% season-to-date improvement.

New Zealand’s dairy exports in April were down, with total volumes decreasing by 10.1% YoY. WMP exports dropped by 16%, mainly due to reduced demand from China and North Africa. However, year-to-date exports remain up by 6.6%, driven by earlier strong performance. Skim milk powder exports also declined by 35% YoY. In contrast, whey and whey protein concentrate exports rose significantly, up 37% and 63% YoY, respectively.

China’s dairy imports fell by 12.5% YoY in April, with significant drops in SMP (down 39%) and infant formula (down 36%), but notable increases in AMF (up 88%) and butter (up 31%). The U.S. saw a 6.7% decline in export volumes in March, while Argentina's exports rose by 11.3% YoY in April. Australia’s exports surged by 19.9% YoY in March, driven by substantial increases in butter and cheese. Total dairy export volumes out of Europe decreased 12.8% YoY in March, down 3.7% year-to-date.

Fonterra announced its opening Farmgate milk price forecast for the 2024/25 season, with a range of $7.25 to $8.75 per kgMS and a midpoint of $8.00/kgMS. The Co-op also narrowed its range for the 2023/24 season to $7.70-$7.90/kgMS. These cautious forecasts reflect ongoing market volatility and uncertainty, particularly regarding Chinese demand.

December 2024
  • Mo
  • Tu
  • We
  • Th
  • Fr
  • Sa
  • Su
  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
2
Mo
Calendar