Lockdown exit and government stimuli promote dairy demand and boost prices
The total disappearance of demand from the food services market (cafes, restaurants, institutional restaurants and school canteens) which followed the quasi global lockdown in March has hit dairy markets hard. Dairy commodity prices plummeted: butter fell 24% between early Jan and early May while SMP fell 27% roughly over the same period.
Since then, the gradual reopening of economies first in Asia, then in Europe, has allowed demand to slowly recover as supply pipeline are being replenished and consumer demand for food services returns tentatively in the new, socially distanced “normal”.
In most of Europe, we have seen phased reopening plans speeded up as the public health statistics appeared to justify it. Beyond Europe, especially in Asia, the reopening of food services is even further advanced, and trade is reported by some operators as improving more than heretofore, with demand from food services recovering to over 50% of normal while retail sales remain very strong.
While some operators warn that this is linked to the refilling of pipelines depleted by the lockdown, and may slow when those are full again, others report a very real improvement in trade.