Dairy Commodity Market in September 2020
Maxum Foods, an Australian supplier of dairy ingredients, launched a September update on the dairy commodity markets. As it is apparent from the report, the dairy commodity market is located in a rather stable position. The only exception is US cheddar prices which throughout August and September underwent a significant variation (average price of 3.859 $/ton in August and 4.729 $/ton in September). Despite such fluctuations, other dairy commodity prices worldwide may be described as rather steady. Variation can be noticed by comparing particular markets.
As buyers benefited in April and May from relatively low costs of major product categories, global trade overcame months of uncertainties. Despite the turbulent period of COVID-19, July trade took overall trade from June-July 2020 to as little as 0,7% behind 2019. Milk production differs through the markets. As the European Energy Exchange (EEX) shows, the rates of dairy products might be slightly increased. Such a trend is visible for the example of skimmed milk powder that contracts went up on weekly comparison from 1 September by 2.2% to 2,200 EUR per tonne. The ongoing increase is also apparent for butter, which in the same period went up by 2.3% reaching 3,395 EUR per tonne.
Whereas in Latin America, milk production may see an unwanted block as changing climate and unfavorable weather conditions appear throughout the region. Weather circumstances will dictate the prices of commodities, as western US states are undergoing some major troubles with wildfires and New Zealand is facing rotations in atmospheric conditions.
Dustin Boughton, Procurement Director of Maxum Foods, points out that the risk of stock-building in butterfat is a halting threat for Oceania, as it depends upon European demand for this product. Stock-build is a risk as the Oceania market has recently seen a decrease in the purchase of butterfat due to consumers lowering interest in such products. Possible restrictions related to the second wave of the pandemic will reveal new customer behaviors that will weigh upon commodities prices.