Where to start? It is fair to say the last year has been the most volatile period of dairy pricing in living memory. We have seen dramatic changes to the market in the past such as the butter crisis in 2016. However nothing compares to the dramatic rise of dairy prices over the last year and it doesn’t look like the trend will be reversed any time soon. Buyers are scrambling around trying to secure stock and nobody is willing to commit to long term deals. The wise move in Q4 2021 was to buy stock for the short term in anticipation prices will come back once the spring milk flush starts again in Feb/March. Unfortunately all the usual logic is no longer relevant. Milk shortages in Europe seem set to follow a common trend throughout the year. Rising input costs for farmers have squeezed margins and a many milk suppliers have exited the market on the continent.
Let’s take a look at the situation in more detail:
The outlook going forward doesn’t look like it will change for the better in the near future. The last year has again emphasized the importance of building relationships with suppliers to ensure stock is delivered in full and on time. The volatility in the market at the moment has created issues for many businesses who are struggling to secure stock. Thankfully Ingredient Solutions have been able to secure sufficient stock to keep our customers’ orders fulfilled as we have long term relationships with our suppliers. It has never been more challenging for supply chains with transport also a major issue to the global economy. Everyone has experienced challenging times over the last 18 months but now more than ever has taught us the key lesson of how important secure supply chains are. It is hard to predict what the market will look like in a years’ time but all we can do for now is fasten the seatbelt and ensure we get through the next 6 months with smooth transitions of supply. It seems prices will stay high for the foreseeable but this is out of our control. What we can control is our service to our customers, ensure we keep everyone updated on market movements and deliveries stay consistent so we have one less issue to worry about.