Commodity prices had a strong start to the year, peaking in May, but since then most have eased back 10-20%. This weaker market sentiment since midway through the year has been attributable to cautious buyer activity, rather than a fundamental shift in supply and demand. International milk powder buyers have been reluctant to commit given high expectations of seasonal output in the Southern Hemisphere. Global cheese and butterfat prices have been stable (figure below). A world-wide butter shortage is underpinning that market. For cheese, global consumer demand continues to improve in large markets in western Europe and the US. Additionally, commercial stockpiles in most regions are low.
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