World Wholesale Report

Published 6 November 18

World wholesale markets returned to regional divergence in October, with the US the only region to show price increases. In the US market, a seasonal increase in demand is supporting prices, despite growing product stocks. The strength of the US dollar has accounted for some of the downward moves in both the EU and Oceania.  In addition, the large increase in production in New Zealand is adding downwards pressure to prices. EU prices for fats were at a premium to other regions, although this gap is closing as a lack of export markets has pulled down EU prices.

EU prices saw the largest drops in prices for butter and milk powders. Butter in particular fell 13.5% in dollar terms, reducing (but not removing) its premium over other regions. Lower butter prices have encouraged increased contracting inquiries, but contracting for the new year is slow due to buyers and sellers having different price expectations, and uncertainty over what private stocks may enter the market. The falling fat value also impacted WMP prices, and slow movement in the SMP market added downwards pressure there too.

Oceania prices were also down across the board, but by less than the EU prices. Australian production is struggling due to drought conditions, but this has been outweighed by strong production in New Zealand. WMP is still NZ’s main focus, but there are ample supplies of milk to produce more of everything. Market sources report that SMP and cheese price changes can be attributed to normal trading fluctuations, but that there is some concern among manufactures that about the downward trend in WMP pricing could continue as a response to the increased supply.

In contrast, US wholesale markets saw price increases in October. The US is starting to move into its holiday baking season, which is increasing demand for butter and WMP. Production of WMP was also down slightly, further supporting prices. The holiday demand hasn’t yet spread to cheese, which saw a dip in prices amidst a ‘wait and see’ buyers’ market.

World Wholesale Table