World wholesale prices
Updated 10 February 2021
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.
World wholesale prices had a positive start to the year, with month-on-month increases almost across the board.
Butter prices rose through January, driven by good demand. Retail demand remained elevated amid coronavirus restrictions. The high Oceania butter price in January made EU butter comparatively competitive, increasing export demand.
Prices also firmed for SMP. Reports of tightness in supply, coupled with an uplift in demand for short-term needs and exports, supported prices.
WMP prices also rose, despite reports suggesting a calm market. The increase in butter and SMP prices could have supported prices. Additionally, a relatively small premium compared to Oceania SMP may have encouraged export interest.
Oceania butter prices jumped 11.5% between December and January, and reached a considerable premium over US and EU prices in January. Production is in its seasonal decline, which encourages buyers to secure product now instead of waiting. Reports suggest strong butter buying from China supported NZ prices.
SMP prices also had a strong start to the year, with good demand in a sellers’ market helping push up prices. However reports indicate that this effect was starting to wane towards the end of the month as supply and demand moved closer toward each other.
The trend for strong demand pushing up prices was also evident on the WMP market, with prices rising on the month. Export demand was reportedly very active, with contracting also good.
Cheese prices also rose, though by less than butter and powders. Reports from the middle of the month indicated slower demand than for other products, with less rush to secure supply. However there was a bit more of an uplift towards the end of the month.
Butter started the year with some stock build-up, which limited price growth compared to the EU and Oceania. However it still managed to record a marginal increase on December (+0.8%), helped by renewed government food box programmes and an increase in foodservice activity toward the end of the month.
SMP prices also firmed in January. Production was reported as active, but supported by good domestic and international demand.
US WMP was the only price that didn’t rise between December and January, instead recording a very marginal decline of 0.1%. Trading activity was reported as light, with export demand possibly subdued by the price premium over EU and Oceania product.
Cheese prices rose a marginal 0.4% on the month. Production was busy, with some manufacturers reportedly taking on extra milk while supplies are strong and spot milk prices low. Continuing food box programmes supported demand.