What we’re seeing this week

 

Against a backdrop of slowing milk supply in the US and lower manufactured product and export availability in EU-27 this week’s GDT event was another positive one. The overall price index rose 1%, with 24,476t of product sold – slightly down on the previous event.

WMP was the best performer, with contract prices rising 2.2% to average US$3,777/t. This time it wasn’t Chinese buyers in the driver’s seat, with SE Asia taking a large chunk of product. Despite a fairly tight global SMP balance sheet, the gains at this event were a more modest 0.9% to average US$3,302/t. Demand was robust, this time Chinese buyers at the forefront of buying.

It was a weaker result for fats, which may be at another resistance point for demand. Butter prices fell 1.9% to average $4,857/t while AMF process were flat at $5,962/t.

Chart of the week

Milk production expanded 1.1% in August according to the USDA. The increase was the smallest in 14 months and followed a 2% YOY growth in July. The milking herd declined again, down 19,000 head compared to the prior month to 9.480m. While down on the multi-decade high reached in May, this was still 106,000 head higher YOY. Average yield per cow for August was down 0.1% YOY, a 15-month low. August was the 15th consecutive month of expansion in US milk output.

Wisconsin, Texas and California jointly accounted for 63% of the national YOY milk growth in August (up from 48% in July), increasing by 2.6%, 3.2% and 0.7% respectively. This more than offset weaker trends in New Mexico (-9.3%) and Washington (-6.6%).