World Wholesale Report

Published 9 October 18

Prices for fats and proteins diverged in September with SMP prices up on the month and butter and WMP generally down. With EU production holding up through the drought and the NZ season off to a strong start, sentiment is relatively positive around supply. This has added some downward pressure to prices, with fats in particular feeling the impact.

EU milk production over the summer is turning out to be higher than expected given the challenging conditions, and supply fears have lifted for now, along with the market support they brought. EU butter prices are much higher than the other regions, which has hindered exports and encouraged New Zealand to offer extra, cheaper butter into the region. A rise in SMP prices at the start of the month more than offset the slight easing in later weeks, putting the average up overall.

In the US, butter production is strong but demand is increasing, which may have helped limit the decline in price compared to the EU and Oceania. WMP is down amid light trading, but demand is expected to increase soon as ‘baking season’ begins in the autumn. Proteins have fared better than fats with SMP and cheddar prices both up on the month; demand for pizza cheese is helping support the overall cheese market.

Milk production is increasing in Oceania, with good year-on-year increases on top of the seasonal build towards the peak (usually in October). The expectation of high supply is adding downwards pressure to most prices. With margins still favouring WMP, SMP production has been limited outside of contractual obligations, and tightness in spot supplies may have supported the increase in SMP price.

World Wholesale Table