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EU Dairy Market Forecast: Cheese Prices to Rise Sharply, Butter and Fluid Milk to Keep Calm

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Archives, EU Trade, Global Trade Daily, Imports/Exports

EU Dairy Market Forecast: Cheese Prices to Rise Sharply, Butter and Fluid Milk to Keep Calm

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IndexBox has just published a new report: ‘EU – Dairy Produce – Market Analysis, Forecast, Size, Trends and Insights‘. Here is a summary of the report’s key findings.

EU cheese prices are expected to rise with the boosting export demand, while fluid milk and butter prices will keep relatively stable. The EU dairy market is forecast to grow only moderately, having raw milk availability restrained by sustainability objectives. Despite that, the EU is to remain the largest dairy exporter worldwide.

Key Trends and Insights

This year, EU dairy prices are forecast to increase, driven by high demand against limited supply. The average cheese price will post the most noticeable gains, rising to $3.23 (+5.1% compared to the three-year average 2019-2021), while milk will be up to $0.346 per kg (only a +0.6% increase). By 2025, cheese could reach $3.30 per kg, and milk will cost $0.361 per kg. Butter price will remain stable near $2.2 per kg throughout the next five years.

According to the EU Agricultural Outlook 2021-31, in the next decade, the growth of EU milk production will slow down to +0.5% per year due to a decline in herds driven by sustainability objectives. In 2022, dairy cow milk production should increase by 1.4% compared to the three-year average 2019-2021 and total 156M tonnes; then, it should reach 158M tonnes by 2025. The number of dairy cows is expected to decrease from 20.0M heads in 2022 to 19.6M in 2025.

This year, cream production is projected to rise to 2.5M tonnes (+1.4% compared to the three-year average 2019-2021), while by 2025, it will reach 2.6M tonnes. Yoghurt and butter production will not see significant changes, remaining at 7.8M tonnes and 2.4M tonnes, respectively.

In 2022, cheese production will expand to 10.9M tonnes (+1.8%) and reach 11.1M tonnes by 2025. Thanks to the rising demand in Asia, foreign trade in cheese will see gains, while the domestic market will expand only moderately since cheese is a long-known product with established consumption patterns. The EU is expected to keep its position as the largest exporter of dairy products, outstepping New Zealand and the U.S. in shipment volumes. Currently, the largest European suppliers of dairy products are Germany (23%), the Netherlands (12%) and France (11%).

Dairy Produce Exports in the EU

In 2020, the amount of dairy produce exported in the EU declined to 19M tonnes, stabilizing from the previous year. In value terms, dairy exports amounted to $43.4B.

In 2020, Germany (4.6M tonnes), distantly followed by the Netherlands (2.3M tonnes), France (2.1M tonnes), Belgium (1.5M tonnes), Poland (1.3M tonnes), the Czech Republic (1.1M tonnes), Ireland (1M tonnes) and Austria (0.9M tonnes) were the largest exporters of dairy produce, together constituting 76% of total exports. Denmark (765K tonnes), Italy (540K tonnes), Latvia (407K tonnes), Spain (379K tonnes), and Luxembourg (366K tonnes) occupied a relatively small share of total volume.

In value terms, Germany ($8.7B), the Netherlands ($7.5B) and France ($5.7B) constituted the countries with the highest levels of exports in 2020, with a combined 50% share of total supplies. Italy, Ireland, Belgium, Denmark, Poland, Austria, Spain, the Czech Republic, Luxembourg and Latvia lagged somewhat behind, together accounting for a further 41%.

In 2020, the average dairy produce export price in the EU amounted to $2,238 per tonne, rising by 2.1% against the previous year. Prices varied noticeably by the country of origin; the country with the highest price was Italy, while Latvia was amongst the lowest. In 2020, the most notable rate of growth in terms of prices was attained by the Netherlands, while the other leaders experienced more modest paces of growth.

Source: IndexBox Platform

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Archives, Global Trade Daily, News

Rapid Urbanization and Westernization of Diets in Asia Propel the Cheese Market

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IndexBox has just published a new report: ‘Asia – Cheese – Market Analysis, Forecast, Size, Trends and Insights’. Here is a summary of the report’s key findings.

Although cheese consumption in Asia remains lower than in Europe and the U.S., the westernization of food habits of the Asian population leads to an increase in demand, especially from young more exposed to fast-foods. The boosting online sales channel and an early shift from the lockdown in China offset the negative impact of the Covid crisis on HoReCa and retail. 

Key Trends and Insights

Cheese consumption in Asia remains low compared with Western countries because the Asian population is more disposed to suffer from lactose intolerance, and there is a lack of established cheese production and consumption culture.

The process of rapid urbanization in Asia, combined with the rise in household incomes and the increasing popularity of the Western lifestyle amongst the middle- and high-income population, promote the cheese market. The increasing consumption of pizza and other European-style fast-foods appears as a fundamental consumer trend, particularly amongst young people. Thus, the cheese market in Asia is concentrated in large cities, where the average-high income segment of the population mainly lives. For the above reasons, and due to the growing population, IndexBox expects the Asian cheese market to expand with an anticipated CAGR of +1.4% from 2020 to 2030, which is projected to bring the market volume to 3.4M tonnes.

Imports buoy over 40% of cheese consumption in Asia. Although an increase in the demand is forecast in the medium term, the possibility of a sharp surge in output remains limited due to the lack of pasture land to expand milk production. High costs for producing cheese in Asia could become another restraining factor. China’s cheese costs may exceed those in the UK or U.S. near twofold.

The spread of Covid-19, to a certain extent, disrupted trade chains in Asia but did not impact dramatically on the major consumption trends. In 2020, cheese imports in China, Iraq, and Korea rose significantly despite the pandemic restrictions.

China constitutes the largest producer and consumer of cheese in Asia. Still, the per capita consumption remains significantly lower than in the other Asian major cheese-consuming countries and tangibly lower than in the U.S. or Europe. This indicates a weak market saturation and a robust potential for market growth. The rising demand in China, driven by rapid urbanization and a middle-class expansion, is to continue driving the Asian cheese market.

Cheese imports by the Republic of Korea have been increasing steadily, buoyed by a sharp increase in consumer demand for packaged meals containing cheese and rising demand from the food processing industry. Moreover, tariff reductions and increased tariff-rate quotas have lowered cheese prices, boosting imports.

Developed countries, such as Japan and Israel, are set to indicate only weak market growth. Per capita cheese consumption is already high, the population is stagnating, and there are currently no prerequisites for any sharp changes in consumer preferences. In Japan, the free trade agreement with the EU entered into force in 2019, which improves the availability of European cheese against that from Australia and New Zealand. In 2020, imports into Japan slightly decreased owing to reduced consumer purchasing power, which falls disproportionately on high-priced milk products such as cheese.

In the Middle East, moderate growth of the cheese market is forecast, driven by similar trends of the gradual rise in household incomes and the penetration of a western lifestyle. A certain potential remains relevant for the markets of Syria and Iraq, should both countries recover from the instability of recent years.

Albeit not affecting the market fundamentals dramatically, the pandemic led to significant shifts in sales channels. During the HoReCa sector was hampered by the lockdown, online sales emerged rapidly. Cheese is widely used in Western-style fast-foods that could keep the take-away services in operation, which mitigated the negative effect of the pandemic. China shifted from the pandemic earlier than other countries, which also contributes to the market recovery.

Cheese Consumption by Country

In 2020, the Asian cheese market increased by 0.6% to $12.1B, rising for the fourth year in a row after two years of decline. The market value increased at an average annual rate of +1.5% over 2012 to 2020. The most prominent growth rate was recorded in 2017 when the market value increased by 9% year-to-year. Over the period under review, the market reached the maximum level in 2020 and is likely to see gradual growth in years to come.

The countries with the highest volumes of cheese consumption in 2020 were China (506K tonnes), Japan (377K tonnes) and Iran (316K tonnes), with a combined 41% share of total consumption. These countries were followed by Turkey, Saudi Arabia, Israel, Myanmar, South Korea, Syrian Arab Republic, Azerbaijan, Kazakhstan and the United Arab Emirates, which accounted for a further 41%.

From 2012 to 2020, the most notable growth rate in terms of cheese consumption, amongst the main consuming countries, was attained by South Korea, while cheese consumption for the other leaders experienced more modest paces of growth.

In value terms, the largest cheese markets in Asia were China ($2.1B), Japan ($1.7B) and Israel ($1.1B), with a combined 41% share of the total market. These countries were followed by Iran, Saudi Arabia, Turkey, Myanmar, South Korea, Syrian Arab Republic, Azerbaijan, the United Arab Emirates and Kazakhstan, which accounted for a further 42%.

In 2020, the highest levels of cheese per capita consumption were registered in Israel (19 kg per person), followed by Azerbaijan (7 kg per person), Saudi Arabia (6.19 kg per person) and the Syrian Arab Republic (4.74 kg per person), while the world average per capita consumption of cheese was estimated at 0.62 kg per person.

Cheese Imports by Country

In 2020, Japan (292K tonnes), distantly followed by Saudi Arabia (181K tonnes), South Korea (148K tonnes) and China (129K tonnes), represented the largest importers of cheese, together committing 61% of total imports. The United Arab Emirates (52K tonnes), the Philippines (41K tonnes), Malaysia (35K tonnes), Kazakhstan (34K tonnes), Taiwan (Chinese) (34K tonnes), Kuwait (29K tonnes), Indonesia (27K tonnes), Jordan (25K tonnes) and Yemen (20K tonnes) followed a long way behind the leaders.

From 2012 to 2020, the most notable growth rate in terms of purchases amongst the key importing countries was attained by China, while imports for the other leaders experienced more modest paces of growth.

In value terms, Japan ($1.3B), Saudi Arabia ($683M) and South Korea ($629M) appeared to be the countries with the highest levels of imports in 2020, with a combined 49% share of total imports. China, the United Arab Emirates, Malaysia, Taiwan (Chinese), Kuwait, the Philippines, Indonesia, Kazakhstan, Jordan and Yemen lagged somewhat behind, accounting for 34% (IndexBox estimates).

Source: IndexBox AI Platform

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Archives, Global Trade Daily, International Trade

Asia’s Milk Production Is Expected to Increase by 2% in 2020

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IndexBox has just published a new report: ‘Asia – Whole Fresh Milk – Market Analysis, Forecast, Size, Trends and Insights’. Here is a summary of the report’s key findings.

After four years of growth, the Asian whole fresh milk market decreased by -2.1% to $309.6B in 2019. The market value increased at an average annual rate of +4.0% over the past decade. The pace of growth was the most pronounced in 2010 with an increase of 15% y-o-y. Over the period under review, the market attained the maximum level at $316.1B in 2018 and then dropped slightly in the following year.

Consumption by Country in Asia

India (198M tonnes) remains the largest whole fresh milk consuming country in Asia, accounting for 54% of total volume. Moreover, whole fresh milk consumption in India exceeded the figures recorded by the second-largest consumer, Pakistan (47M tonnes), fourfold. The third position in this ranking was occupied by China (35M tonnes), with a 9.6% share.

From 2009 to 2019, the average annual rate of growth in terms of volume in India totaled +5.4%. The remaining consuming countries recorded the following average annual rates of consumption growth: Pakistan (+3.2% per year) and China (-1.2% per year).

In value terms, India ($146.8B) led the market, alone. The second position in the ranking was occupied by Pakistan ($37.3B). It was followed by China.

The countries with the highest levels of whole fresh milk per capita consumption in 2019 were Uzbekistan (339 kg per person), Turkey (281 kg per person), and Pakistan (231 kg per person).

From 2009 to 2019, the biggest increases were in Uzbekistan, while whole fresh milk per capita consumption for the other leaders experienced more modest paces of growth.

Market Forecast 2020-2030

Driven by increasing demand for whole fresh milk in Asia, the market is expected to continue an upward consumption trend over the next decade. Market performance is forecast to decelerate, expanding with an anticipated CAGR of +2.4% for the period from 2019 to 2030, which is projected to bring the market volume to 477M tonnes by the end of 2030.

According to FAO projections, Asian production is expected to increase by 2% in 2020 due to expected growth in India, Pakistan, and China, while Turkey may experience a decline. India, the world’s largest milk producer, is projected to increase production by 2.6 percent, or 5 million tonnes. The increase expected this year reflects the efforts of the vast network of rural cooperatives that have been mobilized to maintain milk collection despite the pandemic lockdown. Given the loss of sales in the foodservice industry due to the COVID-19 lockdown, large volumes of milk were sent for processing to drying plants, which were reported to operate at almost full capacity.

Pakistan’s milk production is projected to increase by an average of 3% due to an increase in the herd population.

In China, where the sector has been recovering since 2018, it is projected that milk production will increase by almost 3% in 2020, amid ongoing consolidation of farms and increased efficiency of large dairy enterprises. The introduction of stringent food safety standards by the government has also increased consumer confidence in Chinese milk, which has helped support domestic production growth.

According to FAO forecasts, milk production in Japan will grow, which will be supported by the government measures offered to farmers to manage excess milk supplies and stabilize prices. This is despite a drop in milk consumption in the first months of the year after the government declared a state of emergency and closed schools amid concerns about COVID-19.

Production in Asia

In 2019, production of whole fresh milk in Asia rose to 368M tonnes, picking up by 3.8% against the previous year. The total output volume increased at an average annual rate of +3.6% from 2009 to 2019; however, the trend pattern indicated some noticeable fluctuations being recorded throughout the analyzed period. The pace of growth was the most pronounced in 2017 with an increase of 4.8% y-o-y. The volume of production peaked in 2019 and is expected to retain growth in the immediate term. The generally positive trend in terms of output was largely conditioned by a moderate increase in the number of producing animals and a tangible expansion in yield figures.

Production By Country in Asia

India (198M tonnes) remains the largest whole fresh milk producing country in Asia, accounting for 54% of total volume. Moreover, whole fresh milk production in India exceeded the figures recorded by the second-largest producer, Pakistan (47M tonnes), fourfold. China (35M tonnes) ranked third in terms of total production with a 9.5% share.

In India, whole fresh milk production expanded at an average annual rate of +5.4% over the period from 2009-2019. In other countries, the average annual rates were as follows: Pakistan (+3.2% per year) and China (-1.4% per year).

Producing Animals in Asia

In 2019, the amount of producing animals in Asia expanded modestly to 427M heads, rising by 1.8% against the previous year. This number increased at an average annual rate of +1.5% over the period from 2009 to 2019; the trend pattern remained relatively stable, with only minor fluctuations being recorded throughout the analyzed period. The pace of growth appeared the most rapid in 2010 with an increase of 3.2% against the previous year. The level of producing animals peaked in 2019 and is expected to retain growth in the near future.

Yield in Asia

The average whole fresh milk yield amounted to 860 kg per head in 2019, picking up by 2% on the year before. The yield figure increased at an average annual rate of +2.1% over the period from 2009 to 2019; the trend pattern remained consistent, with somewhat noticeable fluctuations being recorded throughout the analyzed period. The growth pace was the most rapid in 2014 with an increase of 5.2% y-o-y. Over the period under review, the whole fresh milk yield attained the maximum level in 2019 and is expected to retain growth in the near future.

Exports in Asia

In 2019, after two years of decline, there was growth in overseas shipments of whole fresh milk, when their volume increased by 2.6% to 305K tonnes. Total exports indicated moderate growth from 2009 to 2019: its volume increased at an average annual rate of +3.9% over the last decade. Based on 2019 figures, exports decreased by -27.9% against 2014 indices. The growth pace was the most rapid in 2010 when exports increased by 50% y-o-y. The volume of export peaked at 423K tonnes in 2014; however, from 2015 to 2019, exports remained at a lower figure.

In value terms, whole fresh milk exports expanded to $311M (IndexBox estimates) in 2019.

Exports by Country

The shipments of the twelve major exporters of whole fresh milk, namely Kuwait, Kazakhstan, Turkey, Thailand, China, the United Arab Emirates, Pakistan, India, Kyrgyzstan, China, Hong Kong SAR, South Korea, and Viet Nam, represented more than two-thirds of total export.

From 2009 to 2019, the most notable rate of growth in terms of shipments, amongst the main exporting countries, was attained by Kazakhstan (+53.2% per year), while exports for the other leaders experienced more modest paces of growth.

In value terms, Kuwait ($62M), Thailand ($49M), and Turkey ($25M) were the countries with the highest levels of exports in 2019, with a combined 44% share of total exports. China, Hong Kong SAR, the United Arab Emirates, Kazakhstan, South Korea, Pakistan, India, Viet Nam, and Kyrgyzstan lagged somewhat behind, together comprising a further 41%.

Kazakhstan saw the highest rates of growth with regard to the value of exports, among the main exporting countries over the period under review, while shipments for the other leaders experienced more modest paces of growth.

Export Prices by Country

The whole fresh milk export price in Asia stood at $1,020 per tonne in 2019, approximately reflecting the previous year.

There were significant differences in the average prices amongst the major exporting countries. In 2019, the country with the highest price was  Hong Kong SAR ($2,147 per tonne), while Kazakhstan ($423 per tonne) was amongst the lowest.

From 2009 to 2019, the most notable rate of growth in terms of prices was attained by Hong Kong SAR, while the other leaders experienced more modest paces of growth.

Source: IndexBox AI Platform