Dairy price havoc blamed on coronavirus caseloads
Global demand for dairy is in a volatile position with the changing nature of coronavirus in many countries. Here’s how it is affecting prices.
CORONAVIRUS is wreaking havoc with international dairy prices, leading to a third consecutive tumble on the fortnightly-updated Global Dairy Trade figures.
Prices at the latest GDT auction fell 1.7 per cent last week with the market average dropping to US$3004 (A$4193) per metric tonne, down from US$3045 (A$4249) per metric tonne earlier in the month.
Dairy Australia market analyst John Droppert said the unpredictable nature of coronavirus caseloads in different nations and subsequent government restrictions had hit international prices.
“Demand in south-east Asia for dairy is, like most countries around the world, influenced by their coronavirus status at any given time,” he said.
“The pipeline is refilling in Thailand but now the Philippines is having a hard time. As we know here in Australia, that (situation) can change overnight, so the markets are reflecting that uncertainty.”
While the price of skim milk powder rose just a tick over one per cent, to US$2608 per metric tonne, all other categories fell on the back of weakening demand.
Cheddar dropped 3.6 per cent to US$3442 (A$4804) per metric tonne; whole milk powder fell 2.2 per cent to US$2936 (A$4098) per metric tonne; and butter dropped two per cent to US$3370 (A$4703) per metric tonne.
The three consecutive drops in the market followed on from a bullish start to the 2020-21 financial year, when the price index jumped by a surprising 8.3 per cent at the July 7 session.
“In any normal year, August is generally a period of price fluctuation as the market shifts focus from the northern hemisphere to the southern hemisphere. Coronavirus restrictions just add another element,” Mr Droppert said.
“An example of that is Japan, which was tracking along well (with coronavirus numbers) and now that’s changed with even the Prime Minister (Shinzo Abe) affected. That has an impact on the market.”
United Dairyfarmers of Victoria vice president John Keely said the downward international trend was not good news for farmgate prices.
“Yes, it’s often said that Victorian dairy farmers have more to win or lose from international pricing but that’s changed a bit in recent times. For instance, Lactalis is chilling (milk) on farm and sending it north (for domestic consumption).”
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