The world market has been out of balance for several months and this has affected all commodities for animal feed, whether dairy or vegetable.
This imbalance is caused by a very strong demand from Asia, particularly China. Indeed, since the end of 2020, Chinese pig production has started up again very strongly after two years of strong decline due to African Swine Fever. In addition, there are very strong tensions on the maritime traffic causing significant increases in logistics costs.
These factors have had a very strong impact, particularly on soybeans and their co-products (oilcake and oils), cereals, fats and dairy products. Prices have reached historically high levels.
Regarding dairy raw materials, the fundamentals explain these high prices. The milk collection of the main producing countries is not as dynamic as in previous years and despite the good performance of some growing countries (USA, Poland, Ireland) this cannot compensate for the withdrawal of production. The European collection is down by 0.4% in January and February and a cold start to spring is dampening hopes of a high milk peak in April.
Nevertheless, the EU estimates that milk production should increase by 0.5% in 2021 compared to 2020 and this should support the production of cheese (and therefore whey) but also feed the growing and constant export demand.
With the prospect of a spring unfavorable to milk production and demand still on the rise, material prices are expected to remain high and do not show any immediate signs of easing.