Linked In
News In
Markets Extra
Linked In

You are viewing your 1 complimentary article.

Register now to receive full access.

Already registered?

Login | Join us now

Are dairy buyers smarter than suppliers?

Twitter Linkedin eCard

Are dairy buyers smarter than suppliers?


“You have buyers who are more shrewd and perhaps more strategic” is how Lino Saputo, chairman and chief executive of Canada-based dairy giant Saputo, puts it, identifying what he termed a market “pendulum”.


When dairy markets are “good, everybody [on the production side] wants to capitalise it and everyone has the fear of missing out, so they put on more production.


“And then once that happens, they exceed the ability for consumers to consume those solids and everything goes into inventory stocks.


“And those inventory stockpiles are published, and of course the buyers are going to be smart enough not to buy when there’s too much inventory in the system,” Mr Saputo said.


‘Not rocket science’


It is “not more complicated than that”, he said, adding that the outcome of this swing is that “there’s been a lot more volatility” in world prices.


“I don’t think, to be honest with you, that it’s rocket science in our industry.


“I think if we had the right balance between supply and demand, there would be less volatility in the system,” Mr Saputo told investors.


“Unfortunately, the major co-ops around the world don’t seem to have tapped into that.”


‘Busy fools’


Even some producers themselves are berating the industry’s response to weaker prices, in the UK at least, where Michael Oates, dairy board chairman at the NFU [short for National Farmers Union] urged farmers against just keeping their foot on the accelerator.


“We have all been busy fools before. As prices fall, some tend to produce more to maintain their cashflow coming in,” Mr Oates said


“It is a bit of hamster’s wheel and we all learned some pretty hard lessons,” with the last dairy downturn showing that “you could not run fast enough”.


‘More milk than consumers can consume’


Mr Saputo, thought, highlighted the US market was one that “continues to be challenging… because there’s more milk in the system than consumers can consume.


“That’s putting pressure on some of the inventories we have in products like byproducts, WPC [whey protein concentrate] and whey”.


Still, perhaps if Saputo had been more shrewd, it would have waited for lower prices before stockpiling.

Twitter Linkedin eCard
Related Stories

Evening markets: Calendar and dollar revival provoke ag market reversal

For cotton futures, that means a higher close, but the likes of soybeans and corn struggle. Coffee futures maintain downward trajectory

Deere lifts sales hopes - even as it unveils biggest loss in 25 years

The maker of John Deere tractors flags "strengthening" market conditions, but swallows a huge writedown prompted by US tax retorms

Plant Impact agrees takeover by Croda, after failure of Bayer contract

The crop enhancement group, floored by the failure of a supply deal with Bayer, agrees a takeover by a maker of chemicals from anti-wrinkle creams to floor coatings

Weekly grain and oilseed market view from Europe

Sluggish EU wheat exports... but buoyant feed demand... impact of euro currency moves...
Home | About | RSS | Commodities | Companies | Markets | Legal disclaimer | Privacy policy | Contact

Our Brands: Comtell | Feedinfo | FGInsight

© 2017 and Agrimoney are trademarks of Agrimoney Ltd
Agrimoney is part of AgriBriefing Ltd
Agrimoney Ltd is registered in England & Wales. Registered number: 09239069