According to Freshagenda’s July Global Dairy Directions (GDD) outlook, fundamentals are mixed across products and major regions.

Weather continues to challenge milk production in Europe. Excessive rain and summer heat are impacting milk solids output in the short-term, limiting butterfat supplies. At the same time, summer cream and cheese demand are constraining SMP and butter output. Tighter cream supplies will sustain a firm EU butter market well into Q3-2024, with the developing risks of high prices burning off some demand, as well as the prospect of NZ imports at reduced tariff rates.

Milk output through the peak of the NZ season is in the balance with uncertainty due to a shift to a La Niña climatic pattern, and the impact of recent dry conditions reducing soil moisture. The US production outlook is mixed, while improved  cheese demand is critical to keep the market in balance.

The durability of global demand for New Zealand butterfat as output builds through spring will also influence the EU market. The impact of meaningful measures in China to limit milk output may alter import demand later in 2024.