Fundamentals improving

by | Sep 1, 2021 | Forecast, Global

According to Freshagenda’s latest Global Dairy Directions update, market fundamentals through the coming quarters are expected to remain mostly supportive of commodity prices. Despite the profound challenges posed by the tangle of ground and sea logistics affecting most major supply chains, it is difficult to see any major disruption in the supply & demand landscape that could upset these settings through the remainder of 2021 and into Q1-2022. China remains opaque but the firm raw milk prices and strong growth prospects reported by major processors (see below) are supportive of continued demand for imported ingredients.

Northern hemisphere milk production will grow at a slower pace while much focus will in the short-term will be on the NZ season. Despite the ongoing race to vaccinate populations, the worst affected food market channels will continue to gradually recover as new rules for living with COVID become accepted, while the damage to incomes will affect affordability.

Demand for dairy commodities remains steady as a gradual shift towards eating-out continues, although the challenges of managing the Delta variant of COVID (and others that will emerge) in unvaccinated populations will see continued restrictions impacting foodservice channels – whether imposed or through avoidance.