• Prevalent narratives
    • Inflation is here and Inflation is not transitory
    • Supply of ‘everything’ is tight, while demand for most things is unchanged. Expect shortages, empty shelves, long/longer lead times
    • Economies are moving from 15 years of Quantitative Easing (QE) to Quantitative Tightening (QT). Higher rates will cause a recession
  • Global Dairy Supply/Demand balance also tightening further
    • Global Demand stays firm almost everywhere at least until inflation will be reflected at retail.
    • Fluid milk production is lowering, in major productive areas not just seasonally
      • EU: On top of seasonal trail off, EU27 peak milk production was likely reached in 2020 and 2022 cow milk production is forecast at 144.6 million MT 434,000 MT less compared to 2021 and 836,000 MT down from 2020.
      • AU: Australia’s monthly milk production continues to decline (-2% YoY) as smaller herd sizes, hikes in packaging costs, feed, and other input costs drive lower milk output.
      • NZ: milk production volumes continue a downward course along with the seasonal trend also negatively affected by dry and warm weather conditions.
      • US: After highest milk output ever in 2021, milk deliveries in current 2022 are nearly -1% vs. p.y.
  • Dairy Commodity Forward prices balancing out on a very high level
    • Global forward price assessment (not a forecast!), in the months to come, for both Butter and SNF (Solids Non Fats) shows a tentative balance on a still very high level after having reached a record top level ever in mid April observation. Is this the signal of a structural change in pricing long run?