FDBusiness.com

Global dairy markets recovered somewhat unevenly in the first half of 2010. Commodity prices declined in the early months, stabilised in March and improved throughout the second quarter. Markets now appear to have peaked and are expected to trend lower in the second half, according to Glanbia, the Irish and international nutritional ingredients and cheese group.

While volatility continues to be a feature of global dairy markets, the full year 2010 forecast is for pricing to be broadly in line with five year averages but in most instances below the market peak of 2008. While weak milk supply was a dominant feature in the first half, milk production is beginning to increase in the main producing regions and is expected to continue to do so for the rest of the year and into 2011, easing supply constraints. Demand is stable, with Asian demand a key sustaining factor globally.

Dairy farm incomes have recovered somewhat this year, although it may be sometime before farm balance sheets are fully repaired following negative returns in 2009.  

Growth in performance/sports nutrition, protein fortification and ongoing mainstream bars and beverages new product development are driving strong global demand for whey. This growth is underpinned by structural market drivers such as health and wellness (increasing link between diet and exercise, weight management, active ageing), global demographic changes (increasing Asian demand) and consumer awareness (healthier and more nutritious foods).