AUSTRALIA | Global market fundamentals and product fair values continued to weaken in Maxum Foods' assessment, with increasing milk output and sluggish EU and US demand in H2-25.
Attractive producer margins, favourable pasture conditions and the absence of large BTV outbreaks are improving the EU milk supply outlook.
Improving cream supplies and softer demand are further weakening butterfat fundamentals, impacting cheese values. A weaker share in contestable cheese markets against low-priced US cheese isn’t helping.
New Zealand conditions are generally favourable as the season gets into gear, while it is likely herd numbers are at least the same as the prior year. FreshAgenda have slightly lifted its outlook for milk solids output in the 2025/26 season.
US cheese fundamentals remain weak, despite strong milk and cheese production, due to sluggish domestic demand. The US butter market remains chronically oversupplied.
There is no significant change in the outlook for China’s import demand going forward. Inner Mongolia Yili 1H-25 results confirmed that the liquid milk category is under pressure due to low consumer demand. Still, there were some positive signs across other dairy categories, including cheese and milk powder.
Global trade continued to expand with geopolitical and tariff uncertainty. Most of the growth in shipments is due to strong demand for cheese and fats, while milk powders remain weak.
The uncertainty caused by the upheaval in US trade policy is gradually easing, but there is some distance to go before future tariff arrangements are resolved.
The rainfall outlook for September to November is for above-average rainfall across much of eastern Australia. Temperature is expected to be above average in northern, western, and south-eastern regions.
In SW Victoria, hay prices remain high but are declining as rain has improved soil moisture.
Freshagenda’s milk solids production outlook is for a 2.2 percent fall in in 2025/26, with a lower spring peak given the reduction in cow numbers.
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