- European butter prices rallied again last week.
- Some buyers are now turning to Australasian suppliers.
- New Zealand prices climbed in response, with producers struggling to accommodate this new demand.
Eurex (EUR/mt)
- European butter climbed again, so some buyers have turned to Australian and New Zealand suppliers.
- We don’t think these prices will retreat before the end of 2021.
- The European skim milk powder price dropped last week.
- We think it could fall further under high oil prices.
The New Zealand Futures Exchange (USD/mt)
- New Zealand’s dairy products rallied again last week, especially skim milk powder and unsalted butter on the back of tight supply.
Chicago Board of Trade (USD)
- US skim milk powder and whey cheese pulled back last week, but butter rose sharply again.
Comparison of Prices in Major Markets (USD/mt)
- Cheese prices are rallying, only to a lesser extent when compared to other dairy products.
- Prices may therefore rally more significantly next year.
Summary
- European milk production should recover in Q1’22.
- The current high commodity prices should then diverge and buyers holding future contracts of European dairy products could face large retraction.
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