Is it possible that the worldwidedairy market is again entering a downward trend? Has the market cycle shortened from about three years down to one year? Is there no relief for farmers and processors although a longer recovery phase from the past market crisis is very much needed?
The new year starts with a lot of questions. And it will most probably not deliver many answers to these questions just like the years before.
Honest market analysts and dairy managers meanwhile admit that all their past forecasts on market development were absolutely wrong. As it is, everything is left to speculation. Although, there seems to be a general consent in the dairy community that another crisis may be avoided this year as milk fat, after the recent correction, still fetches good prices. And there are positive signals from the cheese market as well.
It stands to reason that 2018 may not bring the next crash of milk prices. But the milk protein markets will stay under pressure. There is now much more milk protein in the market than a few years ago as almost all whey is now being utilised. In fact, supply now exceeds demand. That is the reason why so much SMP is still on public stock in the EU with almost no tendency for reduction of inventories. The recent sale of SMP by the EU Commission of about 1,900 tons at a dumpimg price may be explained by the need to empty stocks but it has surely sent the wrong signal to the market. The only thing the industry can hope for is that Brussels’ dumping of SMP was a one time ever. Otherwise, the milk protein market may very well get in turmoil.