Fresahgenda’s October Global Dairy Directions (GDD) outlook indicates dairy fundamentals are mixed across major producers and regional factors continue to influence value direction for commodities. The risk of further stock-build in butterfat remains moderate, but dependent on the sustainability of cheese demand in the EU and US and the prospects for increased exports. There will be an ongoing slow and bumpy recovery in food service channels given a return to lockdowns in some countries, while events, business and tourism travel will be limited through much of 2021. Weather will impact milk growth in coming months (outside the US) as the La Niña impacts output in NZ and South America, while European feed prices are rising.

Second wave COVID case outbreaks are far larger in scale than in Q2-2020, but governments will take a mixed approach in applying restrictions. Nonetheless, the adequacy of retail demand will be tested as many affected households have less income support or “savings cushion” and the buffer of northern summer cream usage won’t be there to soak up butterfat. The impact of more cautious discretionary spending on the dairy category is uncertain in terms of its volume impact. Commodity prices have also risen since Q2, so buyers in price-sensitive markets won’t have the need or incentive to re-stock.