What we’re seeing this week

Steve and Jo are back for the first time in 2021, and they’re laser-focused on this week’s GDT event. It was the fifth consecutive even with an increase in the overall price index, but how significant is the current rally in the scheme of things?

We take a look at where current GDT prices are in the context of global markets, and ponder the settings which continue to be supportive of continued buying. This is particularly true in China where stocks to use ratios are converging on previous years, and a weaker US dollar is widening the gap between imported product and local product.

We also take a look at what it means for New Zealand farmgate milk prices in 2020/21. Spoiler – it’s pretty positive.

Chart of the week

With all eyes on the US this week for the inauguration of Joe Biden as President we take a look at what’s happening with cheese demand.

Domestic commercial cheese disappearance fell in November – demand was 0.2% lower but with a 2.8% YOY lift for American varieties. American cheese days-in-stock rose 7.9% month-on-month to 51 days at the end of November. Disappearance of “other cheese” varieties (including mozzarella) fell 2.3% YOY in November, the fifth consecutive monthly contraction.

American cheese – which includes cheddar – is a proxy for retail demand in the US, which has been strong throughout the pandemic. Other cheese – including mozzarella – is more reflective of the foodservice channel which continues to take a hammering due to COVID-19 movement restrictions. These number also factor in government food programs which have purchased substantial volumes of cheese product – without them cheese demand would be well and truly in the red.