What we’re seeing this week
This week we have a more interesting GDT event to discuss! The second consecutive negative result was all about the anticipated correction to butterfat values, which had risen well beyond market fundamentals for most of this year. We take a deep dive into some other interesting aspects of this latest GDT event and consider the implications for the wider market.
In other news, the US is back! US exporters shipped the equivalent of 18.6% of national milk supplies in March – that was the second highest monthly volume of all time. Most encouraging is the renewed demand from key customer Mexico, but there is also plenty of action in south east Asia for US dairy exporters.
Chart of the week
This week we take a look at what’s happening in the Australian supermarket sector, with the two major retailers – Coles and Woolworths – releasing their first quarter results. As in many countries, Australian supermarkets benefitted hugely from COVID with lockdown-induced stockpiling and eating out restrictions meaning more meals at home. With COVID-19 more or less eliminated and restrictions on restaurants and cafes easing, shopping habits are returning to normal and sales momentum is waning.
The issue for categories like dairy in Australia and elsewhere, is as the pressure returns on margins will the squeeze on pricing intensify. Costs for retailers and suppliers have increased over the past 12 months in most markets, and some hard-won retail price increases have been passed through to consumers. Here’s hoping the next move is not a price war to gain share of a shrinking pie.