According to dairy ingredient supplier Maxum Foods, there’s ‘little belief’ that the market would go down prior to December – based on futures and actual trades - even if milk supply increases, demand for cream cools and the impact of lower-cost New Zealand butterfat imports is felt.
According to the latest USDA Dairy World Markets and Trade report, butter production in the EU is forecast to decline by more than 1% in 2024, driven by limited milk supply and demand for cheese rather than cream and non-fat dry milk.
In other regions, milk output is rising, with a potentially stronger peak season in New Zealand keeping SMP prices in check despite tight EU and US supplies, the company said.
In China, the USDA estimates raw milk production to increase in 2024 due to a larger dairy cow inventory, with imports of fluid milk, WMP and SMP likely to decline due to higher domestic milk consumption.
In the US, increased farm margins would support improved milk solids output; cheese prices would ease as cheddar supply improves; and butter prices would stay under pressure as cream production improves.
The company suggested that cheese exports would be important to the US cheese balance sheet in the first half of 2025 with a projected advantage in that period without drastic change in the EU market.
The contest in cheese markets will be keen, with New Zealand also seeking to lift cheese output, targeting Australia and other regional markets, to help reduce reliance on SMP and fats in its product mix, the company concluded.