Oil prices not stopping OPEC importing

Published 4 January 16

The group of countries know as Organisation of the Petroleum Exporting Countries (OPEC*) are heavily dependent on oil prices. So when oil prices almost halved, there was a worry the groups buying power, and hence demand for dairy, would fall too.

However, the decline in dairy wholesale prices have kept OPEC in the game, resulting in them purchasing 1.38m tonnes worth of dairy products so far this year (Jan-Oct), slightly more than the same period last year.

Product

Jan-Oct 2015 (‘000 tonnes)

Change from Jan-Oct 2014

Butter

106

-22.1%

Cheese

203

-2.0%

WMP

598

11.8%

SMP

226

-17.1%

Liquid milk

78

15.0%

Condensed milk

173

8.1%

Total

1,384

0.4%

Source: CLAL

As shown below, in general, wholesale dairy prices and oil prices do tend to move in the same direction. However, if dairy prices pick up quicker than oil prices there is a risk that we would see a reduction in demand from the OPEC countries.

 Oil prices not stopping OPEC importing 04.01.16

*OPEC consists of Algeria, Angola, Ecuador, Iran, Iraq, Kuwait, Libya, Nigeria, Qatar, Saudi Arabia, United Arab Emirates and Venezuela.