Demand for dairy remained strong through Q4 2020 till Q2 2021 and will continue to be the key driver in dairy markets through SH 2021. Economic growth around the world is improving, and foodservice demand is returning. Economic recovery is expected to vary by country, although forecasted income growth looks set to remain strong in China, maintaining robust import demand, rising foodservice sales, high domestic milk prices and government messaging around the health benefits of milk are expected to keep China’s import demand strong through 2021.
There is some risk that import demand could weaken in the latter part of the year, particularly if prices continue to increase or stocks build too high. With reduced Chinese import demand a likelihood in 2H 2021, alternative buyers’ purchasing power will be tested and will likely lead to price adjustments in the dairy markets.
In both US and EU markets, the return of domestic foodservice demand will be important in maintaining profitable price levels. In these markets, the expectation is that sales will continue to recover through 2021 although, sales are not expected to reach pre-COVID levels by the end of the year.