Market Outlook June 2020 Bdairy B.V. | Van Godewijckstraat 30 | 3311 GX Dordrecht | The Netherlands Tel: +31 (0)786321230 | E-mail: [email protected] | Web: www.bdairy.com Bdairy Market Outlook Both manufacturers and end users are insecure about the future development of dairy commodity prices. COVID-19 and the current radical economic developments world-wide seem to be the two leading factors at the moment, and both of these are unpredictable. The US had a growth of 1.4% in milk collections (YTD). ‘Dumped’ milk however is not included in these figures... As many schools were closed and no drinking milk could be supplied, the US had to cope with an oversupply of milk in the last two months. The food service was heavily impacted as well. The growth in retail sales in the US did not compensate the loss of sales in other industries. The US production cutbacks and government food donations seem to have helped balance out the milk market in June. New Zealand milk collection was similar to last year’s milk collections, but showed a decline of 0.6% season to date. The Australian figures show a decline of 1.3% season to date. EU-28 Q1 milk collection has gone up with 2.9% (YOY). EU cheese prices are going up, so more milk is being allocated to cheese instead of SMP and butter. SMP After the first positive signs of the world recovering from COVID-19 in May, prices rose from EUR 1,900/mt EXW in the beginning of May to as high as EUR 2,200/mt EXW by the end of that same month. The first week of June showed a more stable, if not bearish, SMP market, mainly caused by a weak demand from both the EU and export markets. During the first week of June, offers were around USD 2,500 to USD 2,600/mt CIF SEA/Northern Africa, without much difference in pricing between EU and US origin. NZ SMP has been trading at USD 2,600-2,700/mt CIF levels. In Europe SMC has been trading between EUR 1,800-2,000/mt EXW in the first week of June. Both SMP manufacturers and end users seem to be comfortable, as lots of buying activity has been done in the last two months. Products were offered at a price level that was interesting enough. Many end users decided to cover their needs for the long term. End users report to cope with high stocks seeing that the sales of their final products were heavily impacted by the COVID-19 crisis. Most end users report to be well-covered till end Q3 arrival. This demand is impacted even more by the less favorable development of the EUR-USD exchange rate from an EU exporter perspective in the first week of June. All eyes were on the import figures of China after the ports were reopened, but SMP imports declined both 4% (YOY) and 14% (YTD) in April.