PERSPECTIVE August 2021 - The latest insights into global dairy markets Your regular global overview of the dairy industry along with trends in ...
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PERSPECTIVE August 2021 The latest insights into global dairy markets Your regular global overview of the dairy industry along with trends in milk production, commodity prices and dairy trade.
Welcome back
to Perspective!
August 2021
Monograms, Netflix, 23andMe, Bitmojis, Spotify, Alibaba, Meal Kits - What do
these have in common? They all incorporate customisation and personalisation
in their core value proposition. Answering our innate desire to learn more about
ourselves and tailor our products to our unique desires.
As technology has advanced, so too has the ability for brands and consumers
to partner in product production. We can analyse individual needs faster using
digital platforms and utilise supply chain innovations to deliver customised
outputs based on these parameters.
Personalised Nutrition is a market that has been steadily growing in recent
years, with some experts predicting it’s on the verge of a boom. To explain this
segment further we have invited Nick Morgan, Founder and Managing Director
of Nutrition Integrated. Nick is passionate about supporting businesses in
navigating their journey into the personalised nutrition space.
Four key movements for the month:
Production – Start of new season in New Zealand. US, EU and Australia
monthly production up.
Exports – Australia, New Zealand and US monthly exports continue to
grow while EU monthly exports ease.
Imports – Increase in imports across China, Asia and Latin America.
Middle East and Africa monthly imports ease.
Prices – GDT Event 289 resulted in the GDT price index decreasing
-1.0% to USD $3,784/MT. The largest movements came from Butter
Milk Powder, Butter & Whole Milk Powder which moved -8.0%, +3.8% &
-3.8% respectively.
If you have suggestions for topics you would like to read about in Perspective,
or any other general feedback, we would love to hear from you. You can contact
us at nzmpbrand@fonterra.com or through your account manager.
Kind Regards,
Gillian Munnik
Director of Sales and Marketing Services
In this issue
Feature article 4
Global production 8
Fonterra milk collection 9
Global exports 10
Global imports 11
Tracking the global dairy market 12
Global indicators 13
Commodity prices 14
GDT results 15
Industry commentary 16
Glossary 20
3
FEATURE ARTICLE
A Paradigm Shift:
The Personalised
Nutrition Future
There is currently a paradigm shift in the attitudes
of consumers towards health and wellness,
demonstrating a desire to be more proactive
regarding their exercise and nutrition decisions.
As a result, there is enthusiasm and growth for the
nutrition markets that comprise “consumer health”
and a resulting increase in the number of brands and
products available that offer functional benefits.
The importance of education:
Whilst the landscape of available brands and
products is now much larger, arguably consumers
have never been more confused. My observation is
that many consumers don’t know what to have,
how much, and when. Not least how this relates
to them as individuals based on their biology, likes/
dislikes, goals, behaviours, and lifestyle choices.
As such, personalisation of diet and nutrition is
seen as a primary enabler to growth, defining the
nutrition industry now and in the future.
In 2020, UBS² estimated that the
global personalised nutrition market
Nick Morgan will be worth $1.3bn by 2025,
Owner, MD & Consultant
Nutrition Integrated with a range of $0.8bn to $3.5bn by 2025 depending
on the extent to which companies can address two
Nick works closely with companies in sport, active
key barriers; price point (too high) and evidence
and lifestyle nutrition regarding their approach to (a lack of). Longer term, they estimate the market
innovation. Nick began his career as an exercise could reach up to $64bn by 2040 (Figure 1).
physiologist in elite sport before working at GSK
and then subsequently establishing his own
company in 2010.
Nick’s primary focus is on how our understanding
of science, the consumer and the market integrate
to underpin business strategy and innovation.
Most recently, this is done through data insights
having started his own data company with a
particular focus on protein bars and drinks.
4 NZMP PERSPECTIVE AUGUST 2021
Figure 1. The proposed size and growth of personalised nutrition (UBS Analysis)
70
67
60
50
USD BILLION
40
37
30
20 20
10 11
1.3 5
0
2015 2018 2020 2025 2030 2035 2040
10% CAGR 15% CAGR 20% CAGR 25% CAGR 30% CAGR
It is important to recognise that personalised Currently, there are three basic approaches:
nutrition is already here and gaining traction.
Only last year, Bayer acquired a majority stake in • Stratified nutrition attempts to group
the vitamin start-up Care/of (valued at $225 million individuals with shared characteristics (e.g.,
at the time) stating that they plan “…to grow the gender, pregnancy) and to deliver nutritional
Care/of business across new channels, new advice that is suited to each group.
categories, and new markets to deliver even more
• Personalised nutrition goes one step further by
personalised nutrition”. But it really is just the start…
attempting to deliver nutritional advice suited
according to the same UBS source,
to each individual based on, predominantly,
biological measures (e.g., phenotype).
only 22% of consumers in the UK,
• Precision nutrition combines an individual’s
Germany, and the US are aware of genetic (biological), environmental and lifestyle
personalised nutrition. This leaves a information to deliver nutritional advice suited
to each individual.
massive upcoming opportunity for
brands to educate consumers and It is suggested that precision nutrition is the
most valid approach⁵ on the basis that the
gain market share. inter-individual differences that separate most
people are smaller than the day-to-day variance
One size does not fit all within each of us.
Personalised nutrition can be defined³⁴ as
“An approach that uses information on individual
In other words, what makes us special
characteristics to develop targeted nutritional regarding nutrition is not just who we
advice, products or services that enables individuals are but what we do.
to achieve lasting dietary behaviour change that is
beneficial to health”.
5
FEATURE ARTICLE
In 2016, the “food4me”⁶ project funded by the EU Today, personalised nutrition is delivered according
demonstrated that personalised nutrition advice to the process outlined in figure 2. It is based on
delivered via the internet produced larger and two phases; inputs and engine (the collection
more appropriate changes in dietary behaviour and interpretation of data) and outputs and
than a conventional approach. However, whilst the engagement (the plan, how it is ‘coached’ and how
evidence may be positive, industry faces the issue it is monitored). In terms of the collection of data
of scalability, particularly regarding data collection, it is important that it is accurate (peer reviewed)
interpretation, and advice generation. time-efficient and non-invasive whilst it also needs
to demonstrate (conform) to data protection and
A complex process regulation.
Personalised nutrition is not simple. People don’t In terms of outputs, the ultimate test is to change
just differ genetically, (or physically and mentally for behaviour. However, on this latter point it not
that matter) but also in terms of their knowledge, yet clear how sensitive the models are to daily
habits, preferences, in addition to the environment in changes. Consumers want to know that their daily
which they live. We must also remember that advice movements are considered - just like WAZE redirects
given to one person does not always suit another, you in traffic - your personalised ecosystem needs
whilst the tone of voice and timing of the advice can to redirect you based on whether you consume
also impact the potential to change behaviour. a product or not, exercise, or progress is faster/
slower than expected. This is the true test of any
personalised nutrition company.
It requires a good understanding
of the individual from their biology Personalised nutrition products
to their lifestyle, in addition to and supplements
knowledge of what drives decision Whilst the nutrition industry is interested in the
testing processes, sensor technology or dietary
making and behaviour change. tracking apps, we are mainly focused on how brands
and companies use personalised nutrition to enable
Figure 2. The conceptual approach to personalised nutrition
Test - Retest
BIOLOGICAL
DECISION NUTRITION REALTIME
LIFESTYLE OUTCOME
MAKING PLAN TRACKING
Feedback loop
ENVIRONMENT
What is the next goal?
The inputs and engine The outputs and engagement
6 NZMP PERSPECTIVE AUGUST 2021
better or more bespoke products or more informed
product choices. Currently, I have observed four
approaches that brands take;
Your personalised Your personalised
product e.g., Sun Genomics selection e.g., Nurish
The holy grail approach whereby This is where a brand, typically
the product is developed entirely of VMS capability or origin,
bespoke to the individual based on prescribes a selection of capsules/
their data whether questionnaire tablets based on your individual
response, blood, microbiome or data. Effectively, they have a
DNA. It is therefore dependant selection of single ingredient (or
on what can be tested, and combination) products which
personalised, not least the they tailor to you and provide
scalability of supply chain. in a personalised box.
Your personalised Your personalised
experience e.g., Myprotein lifestyle e.g., Tespo
This can be any brand who This is the most holistic of
effectively offers the consumer propositions. It typically
a wide range of products as part includes product and hardware
of a DTC ecommerce platform together and is increasingly
and tailors their choice through based on the delivery of food
data informed navigation. or drink formats. They are the
For example, ‘shop by goal’, or propositions most likely to
dietary preference. It is normally go mainstream as part of a
based on 4-8 simple questions. consumer’s healthy lifestyle.
To date, personalised nutrition has predominantly Advancements in technology have
focused on tailored food advice (what to eat or
not eat) and/or dietary recommendations based made personalised nutrition more
on vitamin and mineral requirements. Anecdotally, accessible than ever,
this seems to result in capsules, tablets and beadlet
based formats being the primary product formats. and as such it is a primary strategy that enables
Whilst there are a few personalised gummie brands the nutrition industry to overcome the barriers
available, it is not yet clear how viable or relevant of education and relevance. However, beyond the
propositions related to powders (protein) or bars challenges of scalability, price and evidence, we
(for example) may be. These formats are only just should not underestimate the importance of human
engaging with the concept of personalised nutrition. interaction and therefore success for brands moving
forward will be to understand how they can truly
A technological revolution replicate the human approach to coaching.
Personalised nutrition is often referred to in a
futuristic sense, but it is important to remember References
1 As defined by Euromonitor, Vitamins & Dietary Supplements, Weight Mgt., OTC
that it isn’t new. Dieticians and nutritionists have and Sports Nutrition
been practising personalised nutrition for a long 2 UBS Analysis, Q Series. Future of Food III: Is personalised nutrition the next big
time when ‘coaching’ clients towards their goals. disrupter (14th Jan 2020)
3 Gibney M et al., Personalized nutrition: paving the way to better population
It just wasn’t accessible to the majority based on health. In: Eggersdorfer Met al, eds. Good nutrition: perspectives for the 21st
time and/or price. century. Karger Publishers, 2016: 235-48.
4 Ordovas et al., 2018. Personalised nutrition and health. British Medical Journal,
361:k2173.
5 Betts, J. A. and Gonzalez, J. T. (2016) British nutrition Foundation. Nutrition
Bulletin. 41, 353-359
6 https://www.food4me.org/
Visit our Follow us Disclaimer
Website on Instagram The views expressed above are the opinion of the author, not those of Fonterra,
and Fonterra is not responsible for any decisions taken in reliance on the same.
7
GLOBAL PRODUCTION
Start of the new season in
New Zealand. US, EU and
Australia monthly production up.
NEW ZEALAND AUSTRALIA EUROPEAN UNION/ USA
UK
+1% .8 +2% .6 +2% .3 +2% .9
Change for June 2021 Change for May 2021 Change for May 2021 Change for June 2021
compared to June 2020 compared to May 2020 compared to May 2020 compared to June 2020
+2% .6 +1% .1 +0% .4 +2% .5
Change for the 12 months Change for the 12 months Change for the 12 months Change for the 12 months
to June 2021 to May 2021 to May 2021 to June 2021
New Zealand milk production Australia milk production for EU milk production for the Milk production for the 12
for the 12 months to June the 12 months to May was 12 months to May was up by months to June was 2.5%
was 2.6% higher than 1.1% higher than last year. 0.4% compared to the same higher compared to the same
last year. period last year, driven by period last year.
Australia milk production
higher volumes from Ireland,
New Zealand milk production¹ increased 2.6% in May US milk production increased
Poland, Italy and Sweden.
increased 1.8% on a litres compared to May last year. by 2.9% in June, compared to
basis, (up 1.6% on milk solids Increasing farmer confidence EU milk production² continued the same period last year.
basis) in June compared to and good seasonal conditions to improve and increased by
June production continued
June last year. June typically are yet to materialise into 2.3% in May compared to the
to grow year on year, albeit
represents about 1% of the significant milk growth same period last year. Strong
at a slower pace, following
total season’s production. primarily due to lower herd volumes were observed in
extreme heat in some regions.
numbers, farm exits and Italy, (up 10.6%) on the back
Fonterra collections are A contraction in herd size was
labour shortage. of very low volumes last year,
reported for June, see page 9 also observed following more
and increases in Ireland up
for details. Dairy Australia is forecasting than 12 months of expansion
6.1%, Poland up 1.5% and
milk production to be -1% to as a result of higher input
Spain up 1.0%.
+1% for the 2020/21 season. costs.
Fonterra collections in
Australia are reported for
June, see page 9 for details.
1 New Zealand production is measured in litres.
2 Excludes UK.
Source: Data from Global Trade Information Services and from government and industry websites, including
USDA, Eurostat, High Ground Dairy, Dairy Australia and Dairy Companies Association of New Zealand
8 NZMP PERSPECTIVE AUGUST 2021
FONTERRA MILK COLLECTION
New
New
New
Zealand
Zealand
Zealand
Milk
Milk
Milk
Collection
Collection
Collection
OUR MARKETS
Fonterra Milk Collection
FONTERRA MILK COLLECTION 2021/22 SEASON
New Zealand Milk Collection
2021/22
2020/21
2019/20
w To view a table that shows our
d JUNJ
detailed milk collection in New
UL AUG SEP OCT OCTN OV
JUN
JUN
JUNZealand
JUL
JUL
JULAustralia
and AUG
AUG
AUG SEP
compared SEP
SEP OCT
OCT NOV
NOV
NOV DECDEC DEC
DEC JAN
JAN
JAN FEB JAN
FEB
FEB MAR FEB APR
MAR
MAR MAR MAY
APR
APR MAY
MAYAPR
JUNJ
JUN UL
JUL AUG SEP OCTN
OCT OV
NOV DEC JAN FEB MAR APR MAY
to the previous season –
NEW ZEALAND AUSTRALIAN
COLLECTION
NEW ZEALAND COLLECTION
NORTH ISLAND SOUTH ISLAND AUSTRALIA
-0 .9
NORTH
NORTH
NORTH
ISLAND
-13 .7
ISLAND
ISLAND
%
28.6 % %
7.7%
8.0 % 0.2%
AUSTRALIA
AUSTRALIA
AUSTRALIA SOUTH
SOUTH
SOUTH
ISLAND
ISLAND
ISLAND
28.6
28.6
28.6
1.5%% 8.0
8.0
8.0
% 3.9 %%1.8% 0.2
%
Change for June 2021
compared to June 2020
0.2
0.2 1.0% %
% Change for June 2021
compared to June 2020
-0 -1
% % %
%compared to the previous season %
compared to the previous season compared to the previous season
Season to date
.9 .8
3.9
3.9
3.9%%% 1.8
1.8
1.8%%% 1.0
1.0
1.0%%%
Fonterra's New Zealand North Island milk South Island milk Fonterra's Australia
Season tocollection
date for May was For the 2021/20inSeason
collection May was collection in May was collection in May was
1 June to 30 .June . compared. to the previous season
. . . .
higher than May last season. higher than May last season. . increase on May last season.
Fonterra’s Collection
New Zealand for the May collections
Fonterra’s continued
Australia collection Collections for South Island Favourable autumn
season
collection for Junewaswas, 14.6. in Junethe strength
was seen in
5.9 million April,
kgMS,
Season
Season
Season
toto
date
to
date
date across Victoria
conditions
compared
compared
compared toto
the
million kgMS, to
the
kgMS,the
previous
previous
0.9% previous
season
season
. lower than season compared
compared
compared
a 13.7% decrease on June toto
the
to
the
the
previous
previous
previous
season
season
season
quickly during the second and Tasmania has meant
the same month last season. and sunny weather with
last season. half of May than in recent stable milk production
useful rainfall in many seasons. The heavy rain
As is normal Mayforstarted
this timewithofsettled Farm milk collections were
North
North
North Island
Island
Island
the season,weather
milk
milk
milk
across
collections forthe
JunecountryreducedSouth
South
areasSouth
givingIsland
Island
Island
favourable
as isolated storms and
milk milkin the last weekendFonterra's
milk ofFonterra's
Fonterra's
the Australia
Australia
Australia
Season-to-date collection
collection
collection
collection
represent ininMay
inMay
before
less May was
rain
than was
1% was
arrived
of the for
full collection
flooding collection
collection
impacted ininMay
inMay
production May was
was
was collection
collection
some areas, with disruption collection
was ininMay
. inMay
May was
was
was
western areas towards
season forecast. Full season
in Victoria. collection
Thirdparty was
volumes season, with favourable
... the middle of the . . month.
. were also..actively
. . reduced.. to collections as a ...
result. ...
on-farm conditions
higher
higher
higher than
than
than MayMay
WarmerMay last
last
and last
season.
season.
drier season. . . .
conditions ahead of last season.
returned in the second half Full season collections were
Full
.
season increase
collectionincrease
increase
was ononon
MayMay
May
throughout last
last
the last
season.
season.
season season.
of the month, with already 1.8% down on last season, with .
May
May
May collections
collections
collections continued
dry regionscontinued
continued Collections
of both islands favourable Collections
Collections for
for
on-farm conditions for
South
South
South Island Island Favourable
Island Favourable
Favourable autumn
autumn
autumn
throughout stabilising milk
the
the
the
strength
strength
strength seen
seen
missingseen ininApril,
out oninApril,
April,
meaningful conditions
conditions
conditions across
across
acrossVictoria
Victoria
Victoria
rainfall. Temperatures were production.
above May average across quickly
quickly
quickly during
during
during the
the
thesecond
second
second and
andand
Tasmania
Tasmania
Tasmania has
hashas
meant
meant
meant
and
and
and
sunny
sunny
sunny weather
weather
theweather
country, with
with
and with
sunshine
hours higher than average
half
half
half
ofofMay
ofMayMay than
than
than ininrecent
inrecent
recent stable
stable
stable
milk
milk
milkproduction
production
production
useful
useful
usefulrainfall
rainfall
rainfall
for ininmany
most inregions.
many
many seasons.
seasons.
seasons. The
The
Theheavy
heavy
heavy rain
rainrain
areas
areas
areas
giving
giving
giving
favourable
favourable
favourable ininthe
inthe
the
last
last
last
weekend
weekend
weekend
ofofthe
ofthe
the
Season-to-date
Season-to-date
Season-to-date collection
collection
collection
5
was
was
was. . .
some
some
someareas,
areas,
areas,
with
with
with
disruption
disruption
disruption
Full
Full
Full
season
season
season collection
collection
collection was
waswas season,
season,
season,with
with
with
favourable
favourable
favourable
Source: Fonterra Global Dairy Update, July 2021 tototo
collections
collections
collections
asasas
a aresult.
aresult.
result. 9
... ... on-farm
on-farm
on-farm conditions
conditions
conditions
GLOBAL EXPORTS
Australia, New Zealand and US
monthly exports continue to grow
while EU monthly exports ease.
NEW ZEALAND AUSTRALIA EUROPEAN UNION/ USA
UK
+19% +43% -0% .6 .6 .9 +10% .8
Change for June 2021 Change for May 2021 Change for April 2021 Change for May 2021
compared to June 2020 compared to May 2020 compared to April 2020 compared to May 2020
+4% .5 +13% +2% .6 .8 +11% .9
Change for the 12 months Change for the 12 months Change for the 12 months Change for the 12 months
to June 2021 to May 2021 to April 2021 to May 2021
Exports for the 12 months Exports for the 12 months Exports for the 12 months Exports for the 12 months to
to June were up by 4.5%, or to May were up 13.6%, or to April were up 2.8%, or May 2021 were up 11.9%, or
153,613 MT, on the previous 97,546 MT, on the previous 197,726 MT, on the previous 281,232 MT on the previous
comparable period. This was comparable period. comparable period. Fluid milk comparable period, driven by
primarily driven by WMP, fluid products, whey, cheese and SMP, whey, WPC and cheese,
Australia dairy exports
milk products and cheese but lactose were the main drivers up a combined 267,303 MT.
increased by 43.6%, or 23,398
partially offset by declines in of this growth, up a combined
MT, in May compared to the US dairy exports increased
SMP, AMF and infant formula. 364,439 MT. It was partially
same period last year. 10.8%, or 25,097 MT, in May
offset by declines in SMP,
Total New Zealand dairy compared to the same period
Continued strong demand, infant formula, MPC and MPI.
exports increased 19.6% or last year.
primarily from China, in fluid
51,642 MT, in June compared EU dairy exports decreased by
milk products, up 5,795 MT, Strong demand for SMP from
to the same period last year. 0.9%, or 6,030 MT,
SMP up 5,628 MT, WMP up Mexico and Algeria are driving
in April compared to the
The increase was driven by 4,884 MT and cheese, up 1,782 this increase. Shipments
same period last year.
record volumes of WMP, up MT are driving this increase. to China of whey, SMP and
49,558 MT year-on-year, or April exports saw lower fluid milk products also
This was predominantly driven
45%, to China and South East demand for infant formula, strengthened in May. Partially
by increases in fluid milk
Asia. cultured products, SMP and offsetting this increase was
products, SMP and butter but
butter. This was partially a decrease in cheese export
partially offset by declines in
offset by strong volumes volumes of 4,408 MT, or 12%,
infant formula.
of fluid milk products and on the back of rising prices.
cheese.
Sources: Data from Global Trade Information Services, US Dairy Export Council, EU Milk Market
Observatory, Dairy Australia, High Ground Dairy and Eucolait
10 NZMP PERSPECTIVE AUGUST 2021GLOBAL IMPORTS
Increase in imports across China,
Asia and Latin America. Middle East
and Africa monthly imports ease.
LATIN AMERICA ASIA MIDDLE EAST & CHINA RUSSIA
AFRICA
+3% .0 +17%
.0 - %
0 .1 +19%
.7 + %
17 .0
Change for April 2021 Change for April 2021 Change for April 2021 Change for June 2021 Change for June 2021
compared to April 2020 compared to April 2020 compared to April 2020 compared to June 2020 compared to June 2020
+4% +2% .3 .7 +3% +26% -0 % .9 .1 .3
Change for the 12 months Change for the 12 months Change for the 12 months Change for the 12 months Change for the 12 months
to April 2021 to April 2021 to April 2021 to June 2021 to June 2021
Imports for the 12 Imports for the 12 Imports for the 12 Imports for the 12 Imports for the 12
months to April were months to April were months to April were months to June were months to June 2021
up 4.3% or 75,042 MT up 2.7%, or 126,250 MT, up 3.9%, or 148,923 up 26.1% or 843,361 have decreased -0.3%
compared to the same compared to the same MT, compared to the MT, driven by fluid milk or -3,324 MT compared
period last year. period last year, same period last year, products, whey, SMP to the same period the
driven by higher driven by increases in and WMP. previous year.
Latin America dairy
volumes of SMP, l WMP, infant formula
import volumes¹ China dairy import This was mainly driven
actose and cheese. and SMP, and partially
increased 3.0%, or volumes increased by by Cultured Products,
offset by declines in
3,831 MT, in April Asia (excluding China) 19.7%, or 54,205 MT, in Butter, Caseinate,
fluid milk products
compared dairy import volumes¹ June compared to June Cheese, Dairy Spreads,
and butter.
to the same period increased 17.0% or last year and marked Ice cream, and MPC
last year. 65,077 MT, in April Middle East and Africa a record import month being up a combined
compared to the same dairy import volumes¹ for June as China +70,515 MT. Offset by
The increase was
period last year. decreased 0.1% or 293 continues to promote AMF, Infant Formula,
driven by stronger
MT in April compared the consumption of SMP, WMP, Whey,
volumes across most The increase was driven
to the same period dairy products. Fresh, Lactose, Casein
product categories, in by higher imports
last year. and WPC being down a
particular, cheese to across most categories. Strong volumes
combined -73,838 MT.
Mexico and Chile, WMP There were higher The decrease was of WMP imports
to Peru, and WPC volumes of SMP to the driven predominantly continued in June, Russia import volumes
to Mexico. This was Philippines and Vietnam by lower volumes of sourced primarily from were flat at only a
partially offset by a and lactose to Nepal. SMP and WMP to New Zealand as well as +17% or 16,617MT
large decrease in SMP Nigeria and Algeria Uruguay and Australia. uplift for June 2021
to Mexico. but partially offset by Fluid milk products and compared to the same
higher imports of fluid SMP also contributed month the previous
milk products to Iraq. to the import growth. year.
1 Estimates are included for those countries that have not reported data.
Sources: Data from Global Trade Information Services; EU Milk Market Observatory;
FAO; Highground Trading Group
11TRACKING THE GLOBAL DAIRY MARKET
Global Dairy Market PRODUCTION
The charts on the right
800
800
illustrate the year-on-year
changes in imports, 600
600
exports and production 600
180 180180 180
180
for a range of countries 400
400
LITRES)
LITRES)
that are important players120 400
120120 120
120
in global dairy trade. 200
200
(M (M
60 200
60 60 60
60
MT (000S)
(000S)
MT (000S)
MT (000S)
MT (000S)
MILK
The absolute size of 00
MTMILK
the bars represent the 0 00 0 00
LIQUID
change in imports, exports -200
-200
LIQUID
-60 -60-60
-200 -60
-60
or production, relative
to the same period the -120 -400
-400
-120
-120 -120
-120
-400
previous year.
-180 -180
-600-180 -180
-600
-600 -180
Averages are shown where MAR-20 APR-20
MAR-20
MAR-20
MAY-20
JUL-20
JUL-20 APR-20
MAR-20
MAR-20
APR-20
JUN-20
AUG-20
AUG-20 MAY-20
APR-20
APR-20
MAY-20
JUL-20
SEP-20
SEP-20
APR-20 MAY-20 JUN-20
JUN-20
MAY-20
MAY-20
JUN-20
AUG-20
OCT-20
OCT-20
JUL-20
JUL-20
JUN-20
JUN-20
JUL-20
SEP-20
NOV-20 AUG-20
JUL-20
JUL-20
AUG-20
OCT-20
DEC-20
DEC-20
AUG-20 SEP-20
SEP-20
AUG-20
AUG-20
SEP-20
NOV-20
JAN-21
JAN-21 OCT-20
SEP-20
SEP-20
OCT-20
DEC-20
FEB-21
FEB-21 NOV-20
OCT-20
OCT-20
NOV-20
JAN-21
MAR-21
OCT-20 NOV-20 DEC-20
DEC-20
NOV-20
NOV-20
DEC-20
FEB-21
APR-21
JAN-21
JAN-21
DEC-20
DEC-20
JAN-21
MAY-21
MAY-21
FEB-21
FEB-21
JAN-21
JAN-21
FEB-21 FEB-21
JUN-21
JUN-21
MAR-21
FEB-21
data is complete for the ASIA CHINA
ASIA
NEWASIA ASIA
MIDDLE
ASIA
CHINA
ZEALAND CHINA
EAST
CHINA
CHINA
&MIDDLE
AFRICA
EU27MIDDLE
EAST
MIDDLE
MIDDLE
EAST
&LATIN
UNITEDAFRICA
&STATES
EAST
AFRICA
EAST
AMERICA
&&AFRICA
AFRICA
LATIN
LATIN
AMERICA
RUSSIA
AMERICA
LATIN
LATIN
AUSTRALIA AMERICA
AMERICA
RUSSIA
RUSSIARUSSIA
AVERAGERUSSIA
AVERAGE
AVERAGE
AVERAGE
AVERAGE
NEW
NEWZEALAND
ZEALAND EU27
EU27 UNITED
UNITED STATES
STATES AUSTRALIA
AUSTRALIA AVERAGE
AVERAGE
regions presented.
EXPORTS
180 180
200180
200 180
180
120 160
160120
120 120
120
120
120
60 60 60 60
60
MT (000S)
MT (000S)
MT (000S)
MT (000S)
MT (000S)
80
MT (000S)
80
0 0 0 00
40
40
-60 -60-60 -60
-60
00
-120 -120
-120 -120
-40
-40
-120
-180 -180
-180 -180
-80
-80 -180
MAR-20 APR-20 JUL-20
MAR-20
MAR-20
MAY-20
JUL-20 AUG-20
APR-20
MAR-20
MAR-20
APR-20
JUN-20
AUG-20 SEP-20
MAY-20
APR-20
APR-20
MAY-20
SEP-20JUL-20OCT-20
JUN-20
MAY-20
MAY-20
JUN-20
AUG-20
OCT-20 NOV-20
JUL-20
JUN-20
JUN-20
JUL-20
SEP-20
NOV-20 DEC-20
AUG-20
JUL-20
JUL-20
AUG-20
OCT-20
DEC-20 JAN-21
SEP-20
AUG-20
AUG-20
SEP-20
NOV-20
JAN-21 FEB-21
OCT-20
SEP-20
SEP-20
OCT-20
FEB-21 MAR-21
DEC-20
NOV-20
OCT-20
OCT-20
NOV-20
MAR-21 APR-21
JAN-21
DEC-20
NOV-20
NOV-20
DEC-20
APR-21 MAY-21
FEB-21
JAN-21
DEC-20
DEC-20
JAN-21
MAY-21 JUN-21
FEB-21
JAN-21
JAN-21
JUN-21FEB-21 FEB-21
FEB-21
NEW ZEALAND EU27 UNITED STATES AUSTRALIA AVERAGE
ASIA CHINA
ASIA
NEWASIA ASIA
MIDDLE
ASIA
CHINA
ZEALAND CHINA
EAST
CHINA
CHINA
&
MIDDLE
EU27AFRICA
MIDDLE
EAST
MIDDLE
MIDDLE
EAST
&LATIN
UNITEDAFRICA
&STATES
EAST
AFRICA
EAST
AMERICA
&&AFRICA
AFRICA
LATIN
LATIN
AMERICA
RUSSIA
AMERICA
LATIN
LATINAMERICA
AUSTRALIA AMERICA
RUSSIA
RUSSIARUSSIA
AVERAGERUSSIA
AVERAGE
AVERAGE
AVERAGE
AVERAGE
IMPORTS
300
300
180
240
240
120
180
180
60
120
(000S)
120
(000S)
0
60
60
MT
MT
-60
00
-120
-60
-60
-180
-120
-120
JUL-20
MAR-20
JUL-20 AUG-20
APR-20
AUG-20 SEP-20
MAY-20
SEP-20 OCT-20
JUN-20
OCT-20 NOV-20
JUL-20
NOV-20 DEC-20
AUG-20
DEC-20 JAN-21
SEP-20
JAN-21 FEB-21
OCT-20 MAR-21
FEB-21 NOV-20 APR-21
DEC-20 MAY-21
APR-21 JAN-21 JUN-21
MAY-21 FEB-21
JUN-21
ASIA
ASIA CHINA
CHINA MIDDLE
MIDDLE EAST
EAST& AFRICA
& AFRICA LATIN
LATINAMERICA
AMERICA RUSSIA
RUSSIA AVERAGE
AVERAGE
Sources: Government milk production statistics/GTIS trade data/Fonterra analysis
12 NZMP PERSPECTIVE AUGUST 2021GLOBAL INDICATORS
Food Price
After the month-on-month gains seen recently, the FAO Food Price Index (FFPI) was down 3.2 points (2.5
percent) from May, averaging 124.6 points in June 2021. This was still 31.5 points (33.9 percent) higher
than its level in the same period last year. June’s decline marked the first drop in the FFPI following twelve
consecutive monthly increases. The drop in June reflected falls in the prices of vegetable oils, cereals and,
to a lesser degree, dairy prices, which more than offset generally higher meat and sugar quotations.
The FAO Dairy Price Index averaged 119.9 points in June, down 1.2 points (1.0 percent) from May, also
ending a twelve-month run of uninterrupted increases. At this level, the index value stood 21.6 points (22.0
percent) above its value in the corresponding month last year. In June, international quotations for all
dairy products represented fell, with butter registering the highest drop. This was underpinned by a fast
decline in global import demand, along with a slight increase in inventories, especially in Europe. Whole milk
powder prices fell on reduced purchases by China and lower demand for spot supplies, while global export
availabilities remained adequate to meet existing orders. International quotations for cheese and skim milk
powder fell slightly, also on reduced global import demand amid somewhat higher export supplies from
major producing regions.
Source: FAO
Economic
The OECD Composite leading indicators (CLIs) continue to develop steadily in the OECD area as a whole and
in some large emerging-market economies. In the United States, Japan, and Canada, along with the euro
area, including Germany and Italy, the CLIs remain above trend and continue to expand at a steady pace.
The CLI for the United Kingdom is still expanding and has now reached above trend levels. In France,
the CLI continues to grow steadily but remains below trend.
Among major emerging-market economies, the CLIs for Russia and China (industrial sector) point to steady
increase. In India, the CLI now indicates stable growth, and continues to signal slowing growth in Brazil.
Despite the gradual lifting of COVID-19 containment measures in some countries and the progress of
vaccination campaigns, persisting uncertainties might result in higher than usual fluctuations.
As such, the CLIs should be interpreted with care.
Source: OECD
Consumer
The Economist Intelligence Unit forecasts that global GDP will rebound by 5.4% in 2021 (up from a
previous forecast of 5.3%). The sharp rebound will boost global GDP back to its pre-coronavirus level in
late 2021. However, the pace of recovery will vary greatly across regions. Asia and North America will
recover the fastest, with real GDP back to pre-coronavirus levels as early as this year. The recovery will take
longer in Europe, Latin America, and the Middle East and Africa region, stretching into 2022.
Governments’ unprecedented fiscal responses to the coronavirus pandemic have led to a sharp increase
in public debt in developed and developing economies. Rising debt / GDP ratios have alarmed fiscal
hawks, but debt servicing remains modest in advanced economies, suggesting that the debt outlook is
sustainable.However, a sharp rise in inflation (not our core forecast) represents a risk to global recovery.
In such a scenario, central banks would probably raise monetary policy rates to tame the rise in inflation,
prompting a dangerous surge in debt-servicing costs. The rollout of coronavirus vaccines continues to
condition economic prospects this year and beyond. Production constraints mean that global immunisation
timelines will stretch beyond 2023 in most developing countries.
Source: Economist Intelligence Unit
Weather
Rainfall is likely to be near normal or above normal in the west of both the South and North Islands, and
about equally likely to be near normal or below normal across the rest of Aotearoa New Zealand from
August–October 2021. Higher than normal air pressure, especially to the north and east, is expected to bring
spells of drier than normal conditions to many regions throughout this three-month period.
Temperatures are most likely to be above average in all regions of the country, with NIWA acknowledging
ocean and atmosphere conditions in the Pacific Ocean that are trending toward La Niña. In Australia,
showers overspread most winter grain and oilseed areas, maintaining favourable soil moisture. In Europe
during July, drier weather was welcome in the flood-ravaged locales of eastern France, western Germany,
and Belgium. Sunny skies favoured winter crop dry-down and harvesting over much of western Europe.
Sources: World Agricultural Weather Highlights USDA oCOE, NIWA
13COMMODITY PRICES
WMP WMP
$4,500
$4,500
WMP dropped across the board for July. The largest
$4,000
$4,000
from Dutch Dairy Board with a -4.4% drop to USD
$3,500
$3,500
$3,000
$3,000
$3,684 MT. USDA Oceania dipped -3.2% to USD $3,931/
$2,500
$2,500 MT & GDT had a drop of -2.7% to USD $3,931/MT.
$2,000
$2,000
Futures and forecasts have stayed consistent for the
$1,500
$1,500
next six-months. Rabobank holds steady at an average
$1,000
$1,000
USD $3,000/MT and NZX Futures is USD $3,768/MT.
$500
$500
$0 $0
Apr-21
Jan-21
Feb-21
Mar-21
May-21
Jun-21
Jul-21
Aug-21
Sep-21
Oct-21
Nov-21
Dec-21
Jan-22
SEP-21
JAN-21
FEB-21
MAR-21
APR-21
MAY-21
JUN-21
JUL-21
AUG-21
OCT-21
NOV-21
DEC-21
JAN-22
Dut ch Dairy Board GDT USDA Oceania Rabobank Oceania NZX Fut ures
SMP SMP
$4,000
$4,000 SMP prices have also dropped across all indexes. USDA
Oceania and Dutch Dairy Board dropped -7.4% and -7.7%
$3,500
$3,500
respectively. USDA NASS was down -0.9% to USD $2,777/
$3,000
$3,000
MT. GDT had the largest drop -10.8% to USD $3,067/MT.
The Forecast and futures have also reflected this trend.
$2,500
$2,500
Rabobank Oceania has remained flat on previous
$2,000
$2,000 projections. NZX Futures has averaged at USD $3,146/
MT and CME Futures at USD $2,812/MT.
$1,500
$1,500
Feb-21
Mar -21
Apr -21
May-21
Jun-21
Jul-21
Aug-21
Sep-21
Jan-21
Oct-21
Nov-21
Dec-21
Jan-22
JAN-21
FEB-21
MAR-21
APR-21
MAY-21
JUN-21
JUL-21
AUG-21
SEP-21
OCT-21
NOV-21
DEC-21
JAN-22
Dutch Dairy Board GDT USDA Oceania
BUTTERRabobank Oceania
USDA NASS
Butter
CME Futur es NZX Futur es
$7,500
$7,500 All July Butter prices declined, the largest from Dutch
Dairy Board with a -8.6% decline to USD $4,499/MT.
$6,500
$6,500
USDA Oceania dropped a further -4% to USD $4,506/
$5,500
$5,500 MT and CME Spot dipped -4.8% to USD $3,734/MT.
$4,500
$4,500 GDT had a further drop of -4% to USD $4,467/MT.
$3,500
$3,500 As a result, we see CME Futures revise down a
further -6.2% and Rabobank continues to hold
$2,500
$2,500
their average over the next 6 months.
$1,500
$1,500
Apr-21
Jan-21
Feb-21
Mar-21
May-21
Jun-21
Jul-21
Aug-21
Sep-21
Oct-21
Nov-21
Dec-21
Jan-22
JAN-21
FEB-21
MAR-21
APR-21
MAY-21
JUN-21
JUL-21
AUG-21
SEP-21
OCT-21
NOV-21
DEC-21
JAN-22
Dut ch Dairy Board GDT USDA Oceania
CME Spot CME Futures Rabobank Oceania
CHEESE Cheese
$6,000
$6,000 Mixed results for Cheese in July with CME Spot having the
$5,500
$5,500 largest movement, increasing +9.7% to USD $3,609/MT. USDA
$5,000
$5,000 Oceania dropped -4.6% to USD $4,181/MT and EU Commission
$4,500
$4,500 dipped -1.4% to USD $3,744/MT.
$4,000
$4,000
$3,500
$3,500 GDT dropped -7% to USD $4,050/MT. Futures and forecasts
$3,000
$3,000 have stayed consistent for the next six-months. Rabobank holds
$2,500
$2,500 steady at an average USD $3,883/MT and NZX Futures is USD
$2,000
$2,000 $3,804/MT.
$1,500
$1,500
Jan-21
Feb-21
Mar-21
Apr-21
May-21
Jun-21
Jul-21
Aug-21
Sep-21
Oct-21
Nov-21
Jan-22
Dec-21
SEP-21
JAN-21
FEB-21
MAR-21
APR-21
MAY-21
JUN-21
JUL-21
AUG-21
OCT-21
NOV-21
DEC-21
JAN-22
GDT USDA Oceania CME Spot
EU Commission CME Futures Rabobank Oceania
Actuals Forecasts
GDT Fonterra Dutch Dairy Board USDA Oceania NZX Futures CME Futures
USDA NASS CME Spot EU Commission Rabobank Oceania
Risk and Commercial Solutions
Find out more
Take control of price and supply.
Source: https://www.globaldairytrade.info/en/product-results/
14 NZMP PERSPECTIVE AUGUST 2021GDT RESULTS
OUR MARKETS
Fonterra Global Dairy Trade Results
GDT Results
TRADING EVENT 289
-1.0%
Fonterra GDT results at
usd 3,784
last trading event
15 June 2021:
1.4% USD
4,140 20.7 000’ MT
Change
Change in GDT Price Index from previous in Fonterra’s
event Fonterra’s
Average priceweighted
(USD/MT, FAS) Fonterra product quantity
weighted average product average product price sold on GDT
price from previous event (USD/MT)
The shaded dials indicate
the proportion of each AMF CHEDDAR SMP
product group sold versus AMF BUTTER BUTTER MP CHEDDAR
+1.3% +3.8% -8.0% +0.7%
0.6% 0.1% 1.6%
total quantity sold during
the previous 12 months,
with a 3 month lag. Figures $5,668 $4,589 $3,246 $4,065
within the dials represent USD 5,687/MT USD 4,328/MT USD 3,389/MT
the percentage change in
GDT Price Index and the
weighted average price. WMP BUTTER
All information published
1.6% 1.7
on this page may be LACTOSE SKIM MP WHOLE MP
-3.1 +1.5 -3.8%
reproduced provided the
user acknowledges Global
%% %
Dairy Trade as the source. USD 3,997/MT $1,094
USD 4,612/MT $3,020 $3,598
Fonterra GDT sales LATEST AUCTION FINANCIAL
byGDT SALES BY DESTINATION
destination: Trade event 288 YEAR‑TO‑DATE
Financial Year to Date
TRADING EVENT 288
NORTH ASIA (INCLUDING CHINA)
North Asia (including China) Latin America
SOUTH EAST ASIA
South East Asia Other
To view more information, MIDDLE EAST AND AFRICA 21,588
20,677 667,393
622,468
Middle East and Africa
including a snapshot of the MT
MT MT
MT
LATIN AMERICA
rolling year-to-date results –
The next trading event will be heldOTHER
on 17 August 2021.
Visit www.globaldairytrade.info
CLICK HERE for more information.
Dairy commodity
The next trading event will be held on 6 July 2021. Visit www.globaldairytrade.info for more information.
prices and New Zealand
dollar trend
Dairy commodity
The exchange rate stabilised
PRICE INDEX
1,400 0.76
prices and
around 71 USNew
cents - balanced
between New Zealand’s strong
Zealand dollar trend
economic performance in recent 1,250 0.71
months
The exchangewhichratesupported
stabilisedthe NZD;
PRICE INDEX
NZD / USD
while 71
around inflationary
US cents - pressures
balanced in
the United States have increased 1,100 0.66
between New Zealand’s strong
the risk of US interest rates rising
economic performance in
faster which supported the GDT PRICE INDEX
recent months which supported
USD’s value.
950 0.61
the NZD; while inflationary
pressures in the United States
Source: https://www.globaldairytrade.info/en/product-results/
800 0.56 15
have increased the risk of US JUN 19 AUG 19 NOV 19 JAN 20 APR 20 JUN 20 AUG 20 NOV 20 JAN 21 APR 21 JUN 21
interest rates rising faster whichINDUSTRY COMMENTARY
USDA, Dairy Outlook
Published July 16, 2021
_
Recent Developments
All-milk price forecasts have been lowered from the June forecast due
to recent downward trends in most wholesale dairy product prices,
stronger international price competition, lower than anticipated
domestic demand, high stock levels, and higher expected imports.
The all-milk price forecasts for 2021 and 2022 have been reduced to
$18.30 per hundredweight (-55 cents) and $18.50 per hundredweight
(-25 cents), respectively.
Source: USDA
16 NZMP PERSPECTIVE AUGUST 2021The milk production forecast for 2021 has decreased as However, for the week ending June 27, 2021, dairy cow
lower expected yield per cow offsets higher expected milk slaughter was 4,100 head higher than the week ending June
cow numbers. However, the 2022 milk production projection 26, 2020. Daily milk per cow in May is typically about the
has been raised due to higher expected cow numbers. same as in April. This year, however, it averaged 67.4 pounds
Export forecasts have been raised on a skim-solids milk- in May, a decrease of 0.5 pounds from April. In the past 20
equivalent basis for both 2021 and 2022. years, the only larger decreases from April to May were in
2012 and 2020.
From the period June 12 to the week ending July 10, all
wholesale dairy product prices reported in the USDA There are a few possible reasons for the decrease in daily
National Dairy Products Sales Report (NDPSR) declined. yield per cow from April to May this year:
40-pound blocks of Cheddar cheese decreased 8.9 cents
• Dairy farmers may have dried off cows early or made
to $1.5365 per pound, and the price of 500-pound barrels
changes in feed rations to limit milk production
(adjusted to 38-percent moisture) fell 8.3 cents to $1.5637
per pound. Butter, nonfat dry milk (NDM), and dry whey fell • With relatively low milk prices compared to feed prices,
to $1.7836 (-1.3 cents), $1.2557 (-1.3 cents), and 0.6287 per some dairy farmers may have reduced quantity or
pound (-2.9 cents), respectively. quality of feed for dairy cows
For the week ending July 9, the spot price for 40-pound • Much of the western area of the country experienced
blocks of Cheddar cheese traded on the Chicago Mercantile hot, dry conditions. In May, a drought emergency was
Exchange (CME) averaged $1.6919 per pound, higher declared for most California counties. However, the
than the most recent NDPSR price; while the spot price impacts are highly uncertain. For the week of May 24-
for 500-pound barrels hovered around $1.5550 per pound, 28, Dairy Market News (DMN) indicated milk production
lower than the most recent NDPSR price. Prices for butter, had not yet appeared to be significantly affected.
NDM, and dry whey were lower than the most recent
May dairy exports were robust. On a milk-fat milk-
NDPSR prices, averaging $1.7075, $1.2369, and $0.5056
equivalent basis, they totalled 1.020 billion pounds, 111
per pound, respectively.
million pounds below April but 117 million pounds higher
USDA National Agricultural Statistics Service (NASS) than the previous May. On a skim-solids milk equivalent
estimated that milk production totalled 19.850 billion basis, May dairy exports were a record high of 4.879 million
pounds in May. Average milk production per day was 640 pounds, 175 million higher than April and up 477 million
million pounds, down 4 million pounds from April, but on May 2020. Exports of dry skim milk products totalled a
an increase of 28 million pounds (3.5 percent) from May record high of 195.6 million pounds, 22.6 million higher than
2020. The large year-over-year increase in May 2021 can April and 20.1 million higher than one year ago. Exports of
be attributed to unusual circumstances caused by the whey products were also strong, at 127.8 million pounds
pandemic last year. Milk production fell substantially from in May, 4.9 million higher than April and 27.2 million higher
April to May 2020 as some cooperatives and other milk than May 2020. Lactose exports were 83.1 million pounds in
handlers set pricing terms to discourage overproduction. May, 2.4 million lower than April but 2.8 million higher than
the previous May.
\NASS revised the milk cow estimate for April to 9.500
million head, up 10,000 from the reported previous Imports on a milk-fat basis were 531 million pounds, 11
monthly estimate, with the average number of milk cows million lower than April and 40 million below May 2020. On a
in May at 9.505 million head, 5,000 higher than April. The skim-solids basis, May imports totalled 499 million pounds,
number of milk cows in the United States has increased 37 million higher than April, and 22 million lower than the
every month since July 2020. In recent weeks, federally previous May. Notably, imports of milk protein products
inspected dairy cow slaughter has generally been close to were 23.9 million pounds, 4.1 million higher than April, but
numbers from last year. 3.2 million lower than May 2020.
Source: USDA
17INDUSTRY COMMENTARY
Dairy forecasts for 2021
Milk cows are projected to average 9.500 million head in Higher imports of milk protein products are expected
2021, 5,000 more than last month’s report. The upward based on recent trade data. 2021’s domestic commercial
trend in milk cow numbers is anticipated to continue use forecast on a milk-fat basis is 222.8 billion pounds, 0.1
through the end of the year. Based on recent data, billion down on last month, due to lower-than-anticipated
expectations of continued drought, relatively high feed domestic use in May. The domestic use outlook on a skim-
prices, and lower expected milk prices, the projected annual solids basis for 2021 is 181.2 billion pounds, 1.8 billion
yield per cow for 2021 has been lowered to 24,020 pounds, lower than last month’s forecast, as lower domestic use is
45 pounds less than the previous month’s estimate. expected in the second and third quarters.
The milk production forecast for 2021 has also dropped
Based on recent downward trends in wholesale prices
to 228.2 billion pounds, 0.3 billion lower than last month,
for most dairy products, stronger international price
as lower expected yield per cow more than offsets higher
competition, lower-than-anticipated domestic demand,
expected milk cow numbers.
high stock levels, and higher expected imports, wholesale
The annual forecast for 2021 exports on a milk-fat basis is price forecasts for dairy products have been lowered.
unchanged from last month at 11.1 billion pounds. Due to Price forecasts for cheese, butter, NDM, and dry whey are
higher expected export demand for dry skim milk products, $1.655 (-5.0 cents), $1.690 (-2.5 cents), $1.210 (-4.0 cents),
lactose, and dry whey products in 2021, exports on a skim- and $0.570 (-2.0 cents) per pound, respectively.
solids basis are at 51.3 billion pounds, 1.1 billion higher than
Due to lower expected wholesale prices for cheese and dry
estimated last month.
whey, the Class III price forecast for 2021 has been adjusted
For 2021, the annual projection for imports on a to $16.80 per hundredweight (cwt), 65 cents below last
milk-fat basis is 6.2 billion pounds, 0.1 billion higher than month’s projection. Lower anticipated butter and NDM
last month’s forecast. On a skim-solids basis, the projection prices translate to a Class IV price of $15.40 per cwt, 45
for imports is 5.6 billion pounds, also up 0.1 billion. cents lower than previously reported. The all-milk price
Higher imports of cheese and butterfat products are forecast for 2021 is $18.30 per cwt, 55 cents below the
expected due to suspension of retaliatory tariffs on June calculation.
products from the EU and the UK.
Source: USDA
18 NZMP PERSPECTIVE AUGUST 2021Blimling, Forecast Update
Published July 1, 2021
There is still a lot of milk finding its way into cheese plants Blimling projects further weakness in the sagging NDM /
across the U.S. Blimling’s forecast reflects a continuation of SMP market as the year progresses. Heavy supply will likely
heavy supply and corresponding downward price pressure remain a key market driver, with strong U.S. output and
well into the third quarter of 2021. While demand remains potential for a good New Zealand flush keeping warehouses
solid, needs have evened out over recent months; therefore full. While the demand side appears healthy, some of the
supply remains the stronger force. recent frontloading purchases may wane.
With more than 400 plus million pounds of butter in Dry whey continues to soften, hampered by slowing Asia
storage, there is more than enough to go around, with feed demand and competitive international bids. Blimling
churns getting the fat they need. Implied consumption is expects this weakness to continue in the months ahead.
running ahead of prior year levels; however retail growth is Where processing flexibility exists, whey solids are moving
starting to slip compared to 2019, suggesting less demand. into high protein, keeping whey constrained. Meanwhile,
sustained freight issues are reportedly lifting stock levels.
Source: Blimling
19GLOSSARY
Fonterra draws the information in this update from a variety
of principally external sources listed below. Also included are
defined acronyms for better understanding.
AMF Anhydrous Milk Fat IMF International Monetary Fund
BMP Butter Milk Powder Informa Informa Economics Inc., Dairy
Group, Global Dairy Market Report
CME Chicago Mercantile Exchange
LME Liquid Milk Equivalent
DDB Dutch Dairy Board
MAT Moving Annual Total (this is data
EIU Economist Intelligence Unit averaged across the 12 month period)
FAO United Nations Food and MEA Middle East and Africa
Agriculture Organisation
NDM Non-fat Dry Milk
Farmgate Milk Price The price for
NZX NZ Stock Exchange
milk supplied in New Zealand to
Fonterra by farmer shareholders OECD Organisation for Economic
Co‑operation and Development
Fluid and Fresh Dairy The Fonterra
grouping of fluid milk products (skim Q[1] [First] Quarter
milk, whole milk and cream pasteurised
Reference Products The dairy products
or UHT processed), concentrated
used in the calculation of the Farmgate
milk products (evaporated milk and
Milk Price, which are currently WMP,
sweetened condensed milk) and yoghurt
SMP, BMP, butter and AMF
FTA Free Trade Agreement SEA South East Asia
GDI Global Dairy Intelligence group, Season New Zealand: A period of
Fonterra Cooperative Group Limited. 12 months to 31 May in each year.
GDI provides insights to Fonterra Australia: A period of 12 months
management based on a model of the to 30 June in each year
global dairy market developed by GDI
and populated with publicly available SMP Skim Milk Powder
data. The model outputs referenced TE GDT Trading Event
in this report do not reflect Fonterra’s
non-public production or sales data USDA NASS US Department of
Agriculture National Agricultural
GDP Gross Domestic Product Statistics Service
GDT Global Dairy Trade auction platform USDA Oceania US Department of
Agriculture Agricultural marketing
GDT Price Index is an index that
service price series for specific
provides a measure of the weighted
products in the Oceania region
average percentage change in the
movement in price of all products WMP Whole Milk Powder
sold on GDT. This provides a simple
YOY Year-on-year
measure of changes in dairy price
between trading events YTD Year to date
20 NZMP PERSPECTIVE AUGUST 2021REFERENCES
Tracking the global dairy market Production, Export
and Import charts
The production, export and import charts illustrate year-on-year changes in production,
exports and imports for a range of countries that are important players in global dairy trade.
The absolute size of the bars represents the change in production, exports or imports
compared to the same month the previous year. The portion of the bar below zero represents
a year-on-year decrease and the portion above the line shows the year increase for that
country. Where countries are not shown this is likely due to the data not yet being available.
Weather Source (Page reference – 13)
Comments on weather are obtained from various government weather sites as well as
independent reports including Martell Crop Projections. Global milk production data is
sourced from government and industry websites including US Department of Agriculture
(USDA), EuroStat, Dairy Australia, Dairy Companies Association of New Zealand (DCANZ)
and others.
21Important note: The information and commentary contained in this ‘Perspective from NZMP’ is based on publicly available official government statistics; industry association reports; other published industry reports together with data and insights developed by Fonterra’s Global Dairy Intelligence group (‘GDI’). These sources are identified as appropriate in this ‘Perspective from NZMP’. GDI insights and data are derived from a global dairy market model populated by publicly available data. The model inputs and outputs do not reflect Fonterra’s non-public production, pricing or sales data. Fonterra Co-operative Group Limited and its group members involved in the manufacture or sale of NZMP branded products (‘Fonterra’) has provided this ‘Perspective from NZMP’ for informational purposes only. It does not constitute recommendations or advice for the purposes of making financial decisions regarding trading in dairy products or commodities, or dealing in financial instruments relating to dairy commodities. Although every effort is made to ensure the accuracy of reproducing and interpreting such information, no warranty or representation of such is made and Fonterra shall have no liability in respect of any reliance placed on such information in the formulation of any business decision.
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