Market Update - March 31, 2023

Hi everyone,

Welcome to the OpenDairy market update.

We have seen an active market this week with a good mix of products and geographies. If you would like to receive an update on the weekly price ranges traded on OpenDairy, please subscribe to our weekly wrap up on the website.

This week the market showed different trends for different products. The European feed market seems to be sluggish, putting pressure on the whey spectrum. The availability of milk powders in both Europe and the USA is plentiful, but we see export demand popping up slightly below current market levels. Europe is most competitive on the world market for SMP, followed closely by the USA. In both geographies pressure seems to be building as dryers are running at full capacity.

The butter and cheese market seem the be fairly in balance with even some firmer prices for Gouda. We see good availability of butter milk powder which leads us to believe butter production has been strong in the last few months. The question is whether this was due to good consumption or driven by milk supply pressure. We believe that the relatively strong cheese and butter prices will push more whey and milk towards the drying towers.

On demand side we see increase activity compared to the last few weeks. Powder buyers have been watching prices decline but seem to realize the window of opportunity is approaching. The fact that April and May business is still concluded tells us the coverage on the buyer side is limited.

On the macro-economic side, the dark clouds seem to become a bit darker. One of our partners pointed out the steep decline in Swedish retail spending. With Sweden being one of the stronger economies in Europe we see this as a strong indicator of a serious recession ahead. We have also heard that in other industries the Chinese New Year demand has been very disappointing. This makes us wonder how much downside there still is until the milk production will go down seasonally in the Northern hemisphere.

Thank you for your attention and we welcome your questions and remarks.