Global growth in milk supply remains modest with recovery evident in the US and Europe, while milk flows are more restricted in Australia and South America.

EU output increased by +0.9% in September, while US flows were +1.3% in September. In Oceania, Australian output decreased by -4.8% in September, while NZ flows were -0.7%, but up on a milk solids basis. Overall, the rate of global growth is not expected to exceed +0.7% in 2019.

EU butter production is up +3.9% year to date, with the Dutch quotation at €3,550/tonne. Butter production is likely to remain strong due to the recovery in SMP prices. The SMP EEX Index is trading at €2,520/tonne. Delivered prices on the physical market are slighly lower for butter and SMP. Cheese prices are stable but behind alternatives with the Trigona price at €3,125/tonne.

EU Output and Production – Year to Date:

Overall, there remains considerable uncertainty in global dairy markets due to Brexit (although the further extension to the end of January has eased immediate fears of a no deal outcome), US-China trade wars and US traiffs imposed on EU dairy. The strong US dollar and increased protein demand due to ASF will present opportunities.