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World wholesale dairy prices diverged in August

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Staff Writer | September 11, 2018
dairy
World   In the EU, trading picked up again

World wholesale prices diverged across the regions in August, with EU and U.S. prices mostly increasing but prices in Oceania mostly in decline.

While supply uncertainty is supporting the EU market, optimism over upcoming production in New Zealand is putting downwards pressure on the Oceania market.

In the EU, trading picked up again as people came back from summer holidays. Prices appear to have had some support from production concerns, as the hot dry summer has dampened down expectations of how much it might increase.

SMP production is light with most fresh production already committed, supporting prices. For WMP, buyers have started looking to lock in supplies and secure contracts through the year.

In the U.S., schools starting again has increased liquid milk demand, reducing spot supplies of milk and cream for butter and cheese. Butter conditions have been mixed but prices were up on July overall.

Cheese production started the month lower, and although it has since been increasing it maintained bullish sentiment through the month. WMP prices were down on the month amid light trading.

Although Oceania has been in the low production period at the start of its season, sentiment is optimistic about its upcoming production.

So, although supply is seasonally low, some buyers are holding off on securing contracts in anticipation of higher future supplies and the resultant lower prices. This hold off is, in turn, softening prices in August. Cheese prices did increase month on month, but similar supply optimism kept that increase to a marginal 0.5%.


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