Gradual improvement in global milk market: Credit Agricole

In the world milk market, the situation is now improving after the sharp fall in dairy prices that took place at the beginning of the pandemic. The price increase applies to all major dairy products, say Credit Agricole bank experts.

According to them, the increase in prices is particularly visible in the case of butter and skimmed milk powder, i.e. products whose prices fell the most in the initial phase of the coronavirus pandemic. However, dairy product prices are generally still below pre-pandemic levels.

The factor limiting the increase in prices is the higher supply of milk observed in the European Union and the USA. According to Credit Agricole, it is also worth paying attention to the wide geographical scope of the increase in milk supplies in the EU. Purchase is also growing in Germany, France and the Netherlands, i.e. in countries where milk production has been in a downward trend in recent years. In the coming months, the attention of market participants will increasingly focus on the Northern Hemisphere, where the new dairy season begins. The new season is likely to see a slight increase in milk production in both New Zealand and Australia.

Although the situation in the world trade in dairy products is improving, which is visible, inter alia, in the data on Chinese imports, the volume of trade is generally lower than a year ago, analysts believe. In their opinion, the demand for dairy products in the coming quarters may be lower due to the decline in household income. In the conditions of increased world milk supply, weaker demand will be a factor putting negative pressure on prices.

(PAP)