According to our latest Global Dairy Directions update global dairy market fundamentals remain largely supportive of prices. Northern hemisphere milk production continues to grow slowly, with signs that recent strong US growth is beginning to ease.

EU SMP and butter output will continue to be limited by sluggish milk growth and an increase in cheese output. Improving cheese demand in the US will gradually improve fundamentals and limit the growth in SMP and butter supplies. US butterfat values will be aided by greater disappearance of fresh cream as food service demand lifts.

Demand for dairy commodities remains steady, although disruptions due to the rapid spreading of the Delta variant of COVID into unvaccinated populations which is out of control in many regions, forcing many governments to reimpose restrictions. China’s imports continue to be critical to balancing the market, with its demand growth offsetting weaker milk powder purchases from some price-sensitive regions. In the short-term, commodity prices may drift lower as buyers pushback against elevated prices.