International dairy prices at highest level in 2,5 years

International dairy product prices are at their highest level since June 2014. The Global dairy trade price index reached 1 000 at the beginning of November 2016 and increased by a further 4,5% at the second sale on 15 November. Future prices are also positive. The prices of skimmed milk powder for delivery in the first four months of 2017 are between 9,1% and 10,8% and cheese prices more than 10,4% higher than at the previous sale. Butter prices for delivery in March to May 2017 are also higher.

The main reasons for the increase in global prices are the lower and in some cases negative production growth in major exporting countries and the slow recovery in global demand, especially in China. However, EU stock levels remain high and will limit future price increases.

The steady weakening of the South African rand (28% since June 2014) has resulted in a sharp increase in international product prices in rand terms. This has resulted in an increase in the import parity for South African processors and retailers.

Published on Monday, 21st November 2016 - 14:54