meta Weekly Dairy Outlook: September 2024 Analysis on Prices, Production Trends, and Market Movements | The Bullvine

Weekly Dairy Outlook: September 2024 Analysis on Prices, Production Trends, and Market Movements

Get the latest on dairy market trends and price changes for September 2024. How will these shifts affect your business? Explore our expert analysis.

Summary:

The dairy market is turbulent this week. Except for dry whey, prices for most dairy commodities dropped across cash and futures markets. Cheese prices fell sharply on the cash market, reflecting increased American cheese stocks and a potential demand drop. Butter prices continued declining, with futures down nearly 10 cents per pound over a 6-month. This week, the USDA will release new component and minimum class prices for September, with most expected to rise slightly from last month. EEX and SGX futures trading had significant activity despite overall price declines for several products. The Cold Storage Report shows a rise in American cheese supplies, suggesting a potential decrease in demand. Butter and SMP prices remain low, while European dairy prices have significantly increased, with butter prices reaching new five-year highs. Fonterra’s rising prices affect dairy producers, with notable increases in WMP and SMP prices from recent auctions. Agricultural professionals should monitor these fluctuations to make informed production and pricing strategies decisions.

Key Takeaways:

  • Dairy commodity prices, except for dry whey, have broadly declined, particularly impacting cheese and butter.
  • Future USDA price announcements indicate marginal increases for September in butterfat, protein, other solids, and nonfat solids.
  • Trading activity in the EEX and SGX futures markets showed notable volumes, with mixed results across dairy products.
  • European dairy market trends highlight significant butter price increases, while SMP dipped slightly.
  • Fonterra has raised its forecasted Farmgate Milk Price due to increased prices in GDT events and constrained milk supply.
  • New Zealand’s dairy exports fell by 13.3% in August, with China showing a substantial decline in milk equivalent exports.
  • EU and UK dairy production reported slight decreases, whereas the US and Dutch markets noted minimal milk production and composition changes.

Welcome to the Weekly Dairy Outlook for September 30, 2024. This week, we’ll delve into the fluctuations in dairy commodity pricing, production patterns, and market movements. With insights from the cash and futures markets, you’ll understand what’s happening and feel empowered to navigate this unpredictable market confidently and precisely. From price changes in cheese and butter to the most recent statistics from the USDA and Cold Storage Reports and developments in European and worldwide dairy markets, your understanding of these insights is not just beneficial- it’s crucial. In a market where change is the only constant, your knowledge is not just power—it’s your lifeline, giving you a sense of control in the face of uncertainty.

Are You Keeping an Eye on the Shifting Tides in Dairy Commodity Prices? 

Are you keeping an eye on the changing dairy commodity prices? The drop in cheese and butter prices has been especially noticeable this week. Understanding these developments and how they will affect your business is critical.

Beginning with cheese, the cash and futures markets have declined, with the cash market seeing a more significant dip. According to the Cold Storage Report, American cheese supplies increased at the end of August compared to July, suggesting demand may decrease.

Butter prices haven’t gotten any better. Last week, the 6-month strip of butter futures fell by about 10 cents per pound, extending its downward trend. This consistent fall reflects diminishing demand or overproduction, both of which would have a negative influence on the market.

Interestingly, dried Whey stands out as an outlier in this low-cost scenario. While other dairy commodities are declining, dried Whey has maintained its value and shown hints of resilience. This resilience is a beacon of hope in an otherwise challenging market, and it’s a testament to the potential for positive outcomes even in the face of adversity.

Looking ahead, the USDA will release component and minimum class prices in effect in the Federal Milk Marketing Orders (FMMOs) for September. Based on current projections, here are the expected prices: 

  • Butterfat: $3.57 to $3.67/lb (up $0.06/lb from last month)
  • Protein: $2.77 to $2.87/lb (up $0.64/lb from last month)
  • Other Solids: $0.32 to $0.36/lb (up $0.04/lb from last month)
  • Nonfat Solids: $1.08 to $1.13/lb (up $0.06/lb from last month)
  • Class III: $22.89 to $23.19/cwt (up $2.38/cwt from last month)
  • Class IV: $22.14 to $22.44/cwt (up $0.71/cwt from last month)

These expected increases in component prices highlight a contrasting trend amidst the decline in dairy commodity prices, adding a layer of complexity to your planning and forecasting. 

Understanding these nuances will help you make informed decisions. What strategies will you employ to navigate these shifting price landscapes? It’s not just about understanding the market but also about being proactive and prepared. Strategic planning in response to market shifts is paramount, and your ability to adapt and plan ahead will be a key factor in your success.

Global Dairy Production Trends: A Close Look at Regional Dynamics

This season, the dairy business has seen remarkable output trends. The latest Cold Storage Report reveals a significant rise in American cheese supplies at the end of August. Despite lower output, this increase suggests a potential weakening in cheese demand. Higher stocks with lower output often indicate that customers are not purchasing as much cheese as planned.

Let us split it down by area. EU milk output fell 0.5% yearly in July, reaching 13.85 million tons. Though the drop is minor, its consequences must be addressed. Both milkfat (3.97%) and protein content (3.37%) were stable. However, milk solid collections fell by 0.4%.

Across the Atlantic, the United States provided a mixed bag in August. Milk output remained reasonably constant at 8.53 million tons, down just 0.1% yearly. Despite a stable cow population, productivity per cow rose by 0.4%. Considering these considerations, total milk solid collections increased by 2.2%. Similarly, UK output was constant, with a little drop in milk solid collections but a stable total amount compared to the previous year. Their milk fat content was 4.18%, with protein at 3.37%.

However, Argentina and the Netherlands had more significant drops. Argentinian milk output declined 6.2% yearly, while the Netherlands reported a 3.9% drop. Both nations have reduced milk fat and protein concentrations, indicating issues in their dairy businesses.

These regional dairy production and composition swings reflect broader market dynamics, influencing commodity pricing and inventory levels. For example, strengthened American cheese supplies imply probable overproduction or low demand. However, modest production increases in countries like the United States demonstrate prospective efficiency advantages. Monitoring these patterns allows us to understand better the changing environment and how different variables affect market results.

Analyzing Futures Markets: EEX and SGX Trends Reflect Dairy Industry Shifts 

Market movements in key futures exchanges such as EEX and SGX have lately shown intriguing characteristics that reflect more significant dynamics in the dairy business. The prior week’s trading volume on EEX was 5,240 tons, with butter and SMP accounting for most of that amount. Butter futures for October dropped, with average prices falling to €7,392, down 2.7%. Similarly, SMP averaged €2,643, down 1.8%, while whey futures slid 2.7% to an average of €953.

SGX had a higher trading volume of 10,215 tonnes, led by WMP at 5,477 tonnes and SMP at 3,382. WMP prices increased by 0.2% during the October 24-May 25 curve, finishing at $3,524, while SMP gained 0.4% to $2,939. In contrast, AMF and butter contracts suffered negative pressure, with AMF decreasing by 0.4% to $6,916 and butter sliding by 2.2% to $6,382.

These market swings substantially impact the dairy sector as a whole. The drop in butter and SMP prices shows that demand pressures may be reducing or that overproduction is occurring, which might affect producers’ pricing power and profitability. In contrast, minor rises in WMP and SMP on the SGX may suggest regional demand resiliency or supply restrictions. Dairy experts should oversee these movements because they indicate broader trends influencing supply chains, export potential, and pricing tactics in the months ahead.

Butter Prices Hit Record Highs While SMP Experiences a Slight Dip

This week, European dairy quotes showed varied results. Butter prices rose by €193 (+2.4%) to €8,260, setting new five-year highs. German butter reached €8,500, representing a 4.3% increase. This pattern points to increased demand or probable supply limits, which benefits farmers by predicting more significant income. French butter had a 2.9% increase to €8,180. Such high butter prices are a good indication for dairy producers, perhaps balancing other market fluctuations.

However, the picture could be more precise. Skim Milk Powder (SMP) dropped by €3 (-0.1%) to €2,607. Despite a slight decrease, SMP is still 12.7% higher yearly, signaling a solid market in the long run. This minor decline should alert farmers to consider any fluctuations in demand or supply that may influence their production methods shortly.

Whey prices rose by €40 (+4.8%) to €882, representing an 11.0% rise in French Whey to €910. Such jumps indicate strong market demand, offering an additional opportunity for dairy producers to capture value. With Whey currently 26.5% higher yearly, this sector seems promising.

Whole Milk Powder (WMP) prices increased by €67 (+1.5%), reaching €4,438. With WMP rising 30.7% yearly, this gain consistently increases, assuring farmers of continued market strength.

Mozzarella and other cheeses also exhibited upward moves, with mozzarella up €17 (+0.4%) to €4,806 and cheddar curd up €100 (+2.0%) to €5,163 [](#). These increases indicate strong market fundamentals, prompting farmers to explore broadening their product offers.

Although certain dairy products, such as SMP, had slight setbacks, the increasing trend in European dairy pricing bodes well for farmers. It’s vital to keep alert to these movements, using high-performing commodities to offset possible drops in others. How will you adjust your output in reaction to these market trends?

Riding the Wave: Fonterra’s Rising Prices and Market Dynamics

In the most recent GDT Pulse Auction (PA061), the average winning price for Fonterra Regular C2 WMP increased by $125 (+3.7%) from the previous auction, settling at $3,540. This increasing trend resulted in a $110 (+3.2%) increase over the prior outcome. Fonterra SMP Medium Heat – NZ stayed stable at $2,785 but down $5 (-0.5%) from the previous result. Despite uneven outcomes across items, the auction was busy, with 2,196 tons sold and 51 bidders participating.

Meanwhile, Fonterra has increased its expected Farmgate Milk Price range for the 2024/25 season. The new midpoint is set at NZ$9.00, up from NZ$8.50. The increased price range is between NZ$8.25 and NZ$9.75 per kgMS. This change is due to rising costs in GDT events and a limited milk supply in crucial milking zones.

Several factors are causing these shifts. First, the higher prices seen in GDT events indicate a robust worldwide demand for dairy goods, reflected in the growing pricing of items such as WMP. Second, milk supply difficulties in crucial locations like New Zealand lead to price increases. Due to adverse weather and logistical obstacles, milk production has been curtailed, leading to a short supply.

These dynamics highlight the complicated interaction between global demand and supply circumstances influencing dairy market developments. Dairy professionals must be educated about these changes to make strategic decisions.

New Zealand’s Export Challenges: Navigating the 13.3% Decline 

New Zealand’s dairy sector has lately seen significant adjustments in export dynamics. In August, milk-equivalent exports fell 13.3%. This significant reduction is concerning, particularly given the complicated considerations. Despite the drop in numerous categories, cheese exports almost broke even, remaining flat yearly. What may be causing these trends?

Lactose and Infant Milk Formula (IMF) exports were the shining examples, demonstrating durability and even growth. The increase in IMF exports was mainly driven by more robust demand from China, Hong Kong, and Australia. In contrast, other categories struggled to keep up, contributing to the overall decrease.

Your crucial market, China, exhibited declining demand, as shown by a 27.8% drop in milk-equivalent imports from New Zealand. This development reflects more significant shifts in global trade dynamics and consumer preferences.

Understanding these adjustments and adapting your approach correctly is critical. Are you prepared for what happens next?

The Bottom Line

It is more important than ever to keep up with a complicated world of changing dairy prices, regional production differences, and altering global needs. Commodity prices have fallen significantly this week, notably for cheese and butter, despite increased component prices in the Federal Milk Marketing Orders. EEX and SGX futures gave insights into the market mood, indicating diverse movements across dairy products. Meanwhile, Fonterra’s increasing farmgate milk prices and New Zealand’s export issues highlight the need for strategic agility.

Understanding these weekly patterns is more than simply staying current; it’s about using this information to make educated, strategic choices that can protect and improve your company’s profitability. Are you considering these changes and planning for their chances and challenges? Stay tuned for future upgrades to keep your dairy company growing and ahead of the curve.

Learn more:

Join the Revolution!

Bullvine Daily is your essential e-zine for staying ahead in the dairy industry. With over 30,000 subscribers, we bring you the week’s top news, helping you manage tasks efficiently. Stay informed about milk production, tech adoption, and more, so you can concentrate on your dairy operations. 

NewsSubscribe
First
Last
Consent
(T25, D1)
Send this to a friend