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Volatile dairy market leads to price increases

Volatile dairy market leads to price increases

At MOCO, we want to help our customers run a great food business; and part of that is keeping you across industry changes.

At the moment, we are seeing significant price increases across our dairy category. This is due to a number of factors:

  1. The sudden drop in milk-solids price approximately 18 months ago, led to a significant reduction in the Australian (and global) dairy herd.
  2. There is a significant shortage of fresh milk. Australia’s production alone has dropped by 10 percent.
  3. There has been an increase in export demand, especially from China for infant formula and cheese products.
  4. The global skim milk powder price has crashed. It is produced as part of the butter production process, which has become economical, putting further pressure on prices.

Whilst Spring weather conditions in southern Australia should bring some relief (as there is more feed for the herd); it may take a couple of years for supply to return to normal levels.

Right now you will be seeing sharp increases in cream and butter, with continuing increases in cheese and other dairy products. You might also notice some substitution on butter lines, where you could receive an alternative brand or pack size. This is necessary to maintain supply, given the volatility of the market.

If you have any questions, please do not hesitate to contact the MOCO Team.

Regards,

MOCO Team

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