World wholesale prices
Updated 12 November 2020
This price series looks at the average wholesale prices of certain dairy products from the EU, Oceania and the US. It aims to provide an overview of global wholesale price movements which can affect prices closer to home.
Butter markets were mixed in October. Demand for packaged butter was strong, but bulk butter markets were slow, with buyers uncertain about committing to new contracts. This is also linked to lower demand from a restricted foodservice sector and subsequent increase in retail demand. The overall effect was a marginal decline on the month.
Increased export demand and active spot market interest helped support SMP prices through October. However, currency also influenced prices. While we saw a slight increase in pricing in euro terms in our EU wholesale prices, in US dollar terms the SMP price fell slightly.
Activity on WMP markets in the month was described as calm and constant by some reports. While most EU WMP supplies internal demand, export interest has been higher. Since producers were easily able to increase production to satisfy this demand, it did not drive up prices. Currency movements meant that, in dollar terms, there was a marginal decline in price overall.
Butter prices rose 8% on the month in October. Buyers were motivated to secure future supplies, and there were also reports of increased spot activity towards the end of the month. It was suggested that plans to lower the volume of butter offered on the GDT over the next 12 months may have supported prices.
Reports indicated that Oceania SMP markets were mixed in October. Overall, strong export interest helped raise the monthly average price.
WMP prices were also up on the month, with increased export interest from the Middle East helping boost prices in early October. However, towards the end of the month buyer nervousness led to prices starting to ease.
Strong demand for Cheddar cheese, from domestic as well as export markets, supported prices in October. This demand was mainly evident in the start and middle of the month, quieting off a bit towards the end.
Increasing demand supported a rise in butter prices. The run-up to Thanksgiving and the holiday season helped drive demand, particularly on the retail side. Food service demand is reportedly creeping upwards, but still down compared to previous years.
SMP price rose 6.5%. Export interest was strong and spot trading was active.
WMP markets were reportedly balanced for a fair part of the month. Supply was able to meet increased holiday demand from the baking and confectionary sectors. Spot trading did bring in some lower prices, leaving WMP a little down on the month overall.
There was a strong increase in cheese prices in the month, up nearly 30% from September. Holiday preparations and government purchases supported demand, particularly for block cheese. Barrel cheese, which is typically directed to industrial markets, had a particularly bullish month, with slightly tighter supplies helping to shrink the price gap between it and block cheese.