While control of infections in some major countries is in sight, a lengthy timeline before life as we knew it is realistic, while the effects of the complex macro-impacts caused by massive stimulus will have lasting effects. Meanwhile there will be a slow return to pre-COVID economic conditions for developing Africa, South Asia and Latin America.

Global trade improved from the dip in February 2021 compared with the same month in 2020. As usual, some large distortions continue to affect the numbers, the most significant being the aftereffects of Brexit.

Fundamentals of dairy markets have improved with the further slowing of global milk output, as the EU takes longer to crawl out of winter, tightening SMP and butterfat availability. Feed challenges will affect milk growth into H2-2021 and could be far worse if there’s a hot summer.

While US milk collections remain strong and stocks heavy, the glut of milk will gradually shrink as producers respond to poor margins, while improving demand for cheese and butterfat will come as foodservice outlets re-open. Dry conditions in several other regions – Brazil, Mexico and lately the UK – will also help slow milk output.

The Chinese demand has heavily influenced price discovery to lift milk powders and butterfat prices. The recent prices have and will continue to meet buyer resistance and weaken fundamentals. Butterfat trade was significantly weaker with COVID’s impact on food service demand, but the recent spike in prices will test affordability as activity recovers. WMP demand outside China has also been significantly weaker at prices much lower than current values.