As time goes on, the recovery in the dairy market seems to be sustained. There was further evidence of the recovery this week as the Global Dairy Trade (GDT) auction went up by 5.7%.
The big news of the week of course was the US and Israeli attacks on Iran.
The impact on oil and gas prices was immediate and this has fed through to the grain markets, with US corn prices increasing by almost 6% over the last month.
While not hugely significant just now, if fertiliser costs increase, driven by scarcity, then we can expect global corn and grain prices to increase significantly.
One of the drivers of higher milk output over the last six months was cheap grain. If grain gets dear, farmers will feed less of it and milk supply should fall. If this happens, it should boost the dairy market.
The flip side to all this is that for many parts of the world, dairy remains a luxury item, so if the global economy declines as a result of this conflict, then that will reduce demand for dairy. We are already seeing sharp declines in the stock market and the increase in the price of oil and gas is likely to fuel inflation.
Recent experience has taught us that turmoil is good for dairy markets, but that is not to say that the current crisis is going to be good. The futures market has lifted on the back of the conflict, but not by as much as some expected.
My own view is that Trump will not want to see his intervention triggering another wave of inflation in the US. The question is, have we passed the point of no return on that.
As time goes on, the recovery in the dairy market seems to be sustained. There was further evidence of the recovery this week as the Global Dairy Trade (GDT) auction went up by 5.7%.
The big news of the week of course was the US and Israeli attacks on Iran.
The impact on oil and gas prices was immediate and this has fed through to the grain markets, with US corn prices increasing by almost 6% over the last month.
While not hugely significant just now, if fertiliser costs increase, driven by scarcity, then we can expect global corn and grain prices to increase significantly.
One of the drivers of higher milk output over the last six months was cheap grain. If grain gets dear, farmers will feed less of it and milk supply should fall. If this happens, it should boost the dairy market.
The flip side to all this is that for many parts of the world, dairy remains a luxury item, so if the global economy declines as a result of this conflict, then that will reduce demand for dairy. We are already seeing sharp declines in the stock market and the increase in the price of oil and gas is likely to fuel inflation.
Recent experience has taught us that turmoil is good for dairy markets, but that is not to say that the current crisis is going to be good. The futures market has lifted on the back of the conflict, but not by as much as some expected.
My own view is that Trump will not want to see his intervention triggering another wave of inflation in the US. The question is, have we passed the point of no return on that.
SHARING OPTIONS