According to Freshagenda’s February 2023 Global Dairy Directions update while commodity prices have lifted in most regions, driven by butter and SMP, little has changed in the underlying fundamentals other than a feeling butter demand will improve at lower retail prices and that Chinese demand will rebound sometime soon.

The EU dairy market remains the dominant influence in the outlook with significant uncertainty as to how milk producers will respond to steadily falling milk prices, easing feed and fertiliser costs but also some tough production conditions ahead after little winter rainfall in many areas. The cheese market in that region – affecting whether more milk will be diverted to exported commodities – remains vital as the confidence of European consumers gradually improves. Chinese demand is reviving as the population gets moving and working again but there is little across all commodity sectors to suggest it will roar back.