Customer

Market Report
June 2022

Market Update Product Update Ornua’s Business

 Global Dairy Market Overview
Global flows fell again in April (-1.3%). The rate of decline was sharper versus Global Exporters Milk Flows
March, but this was compared to a strong 2021 base.

Collections will be negative in the first half of the year before recovering in the
second half. Annual flows are likely to be flat and could turn slightly negative.

Cheese and butter markets were quiet after Easter and into May, but interest
picked up with buyers looking to cover quarter three needs.

Interest for SMP also improved, though sentiment is not as strong as cheese and
butter with weaker global export demand impacting. Indeed, Chinese imports have
eased which is placing some pressure on global powder prices, particularly WMP.

However, concerns over security of supply continue to support the dairy market
with prices likely to remain around current levels into quarter three.

Demand factors will eventually become more evident. There are signs that retail
sales are slowing with exports to developing countries also weaker.

The actual impact of high prices on retail sales and future Chinese buying patterns
will be key going forward.

Customer Report June 2022

2
Market Update Product Update Ornua’s Business

Market Overview / Global Milk Supply / EU-27 Milk Supply / Dairy Demand Snapshot / Macro Barometer / Global Quotes and Auctions / Global Price & Futures Market
Global Milk Supply Snapshot -0.3%*
Jan-Apr 2022 EU-27:
(Note: *denotes estimate). Flows fell again in April (-0.9%) versus a
solid 2021 base. Output based on milk
solids has also been weaker.
May/Jun Trends

-1.0%* Global

-1.0%
Global: -5.5% EU-27
Flows have fallen for eight consecutive months. US:
The rate of decline increased in April (-1.3%) April collections fell by -1.0% in volume New Zealand: US
compared to a strong 2021 base. terms, but milk solids have been stronger April output was down by -5.6% in volume,
in recent months. but this is compared to strong growth this
time last year. NZ

AUS

+1.7%
ARG
-6.0%
Argentina:
Argentinian flows increased by +2.5% in
March and are likely to rise by a similar Australia:
amount in April. Flows fell once again in April (-6.6%),
posting a three-year low for the month.

Customer Report June 2022

3
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Market Overview / Global Milk Supply / EU-27 Milk Supply / Dairy Demand Snapshot / Macro Barometer / Global Quotes and Auctions / Global Price & Futures Market
 Global Milk Supply

EU-27 Milk US Milk NZ Milk

9,500
3500
14,000
9,000 3000
13,500

13,000 2500
8,500
12,500 2000

12,000 8,000 1500

11,500 1000
7,500
11,000
500
10,500
7,000 0
10,000 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
2020 2021 2022 2020 2021 2022 2019/20 2020/21 2021/22

EU-27: Feb +0.6%, Mar -0.6%, Apr -0.9% (est) US: Feb -0.9%, Mar -0.4%, Apr -1.0% NZ: Feb -8.2%, Mar -1.9%, Apr -5.6%

Customer Report June 2022

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Market Overview / Global Milk Supply / EU-27 Milk Supply / Dairy Demand Snapshot / Macro Barometer / Global Quotes and Auctions / Global Price & Futures Market
 -1.9% +2.7%
European Milk Supply
UK:
Jan-Apr 2022 Flows have fallen for eight Poland:
consecutive months with April Collections have been strong with
(Note: *denotes estimate).
collections down -2.0%. April volumes expanding by a
further +2.3% year-on-year. May/Jun Trends

-0.4%* EU-27

EU-27: -0.7%
Flows fell again in April (-0.9%) compared to a
-2.3% Germany
solid 2021 base. Output based on milk solids Ireland:
has also been weaker. April flows were down -1.0%, though Netherlands: France
this was compared to a very strong Collections continue to fall with April
prior year base. output down by -2.6% versus a weak Netherlands
base.

Poland

-1.6%*
-1.5%* Ireland
France: +0.9%
While quarter one figures were revised Germany: Other EU-27
up, flows are still expected to fall by
about -2.5% in April.
Milk flows continue to contract with Other EU-27:
April collections expected to fall by Growth in Italy, Belgium, Denmark and UK
-2.0% year-on-year. smaller producers has helped to offset
weakness elsewhere.

Customer Report June 2022

5
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Market Overview / Global Milk Supply / EU-27 Milk Supply / Dairy Demand Snapshot / Macro Barometer / Global Quotes and Auctions / Global Price & Futures Market
 European Milk Supply – Big 3
German Milk French Milk UK Milk
3,000 2,400 1,500

2,900 2,300
1,400
2,800 2,200

1,300
2,700 2,100

2,600 2,000
1,200

2,500 1,900
1,100
2,400 1,800

2,300 1,700 1,000

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

2020 2021 2022 2020 2021 2022 2020 2021 2022

Germany: Feb -0.6%, Mar -1.3%, Apr -2.0% (est) France: Feb -0.9%, Mar -1.3%, Apr -2.5% (est) UK: Feb -1.7%, Mar -2.2%, Apr -2.0% (est)

Customer Report June 2022

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Market Overview / Global Milk Supply / EU-27 Milk Supply / Dairy Demand Snapshot / Macro Barometer / Global Quotes and Auctions / Global Price & Futures Market
Dairy Demand Snapshot
EU: German butter and cheese sales
dipped below 2021 and 2020 levels again
in April. Retail food prices increased by
North America: Domestic cheese +8% in the last year which is starting to North Asia: Chinese imports were down
disappearance was strong through affect consumer buying trends. -15% in quarter one and interest was
quarter one but the rate of growth weaker at GDT events in April and May
eased. In contrast, butter disappearance with COVID lockdowns impacting. Demand
was muted through quarter one but from other North Asian countries has been
improved in April. solid (i.e., Japan and South Korea).

Middle East: Imports were weaker last

year and fell sharply in quarter one with
high prices and weaker economic growth
impacting. However, buyer interest was
solid during April and May GDT events.
South-Central America: After falling in Southeast Asia: Imports increased in
January and February, imports recovered quarter four last year with quarter one
in March with buyer interest improving at volumes up +5% year-on-year. While this is
recent GDT events. The Mexican Peso and compared to a low historic base, buyer
Brazilian Real strengthened which interest has been strong at recent GDT
improved buying power. events.
Africa: Imports were weaker last year and
fell sharply in quarter one with high prices
and weaker economic growth again
impacting. Interest was strong during April
GDT events, but weakened in May.

Customer Report June 2022

7
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Market Overview / Global Milk Supply / EU-27 Milk Supply / Dairy Demand Snapshot / Macro Barometer / Global Quotes and Auctions / Global Price & Futures Market
 Macro Barometer
Supply
Farm-gate prices
European and US prices
continue to rise as processors
seek to encourage farmers to
produce more milk in a high
cost environment.
Fertiliser prices
Fertiliser prices rose sharply
in recent months and are at a
high level, though it appears
the rate of growth eased a
little.
Herd size and yield
Cull rates appear to be on
the rise, but cumulative rates
are modest compared to
historic levels.
Market Update
Market Overview / Global Milk Supply /
Feed prices
Like fertiliser, feed prices
increased sharply in recent
months and are at a high
level, though it appears the
rate of growth has eased.
Weather
Conditions are largely
favourable in Europe and the
US, but dry weather is
starting to impact.
Global milk supply
Flows are expected to fall in
H1 before recovering. It is
likely annual flows will be flat
to slightly negative year-on-
year.
Product Update
EU-27 Milk Supply / Dairy Demand Snapshot /
Demand
Global economy
The UN warned that weaker
GDP growth and inflation will
hit developing countries that
import commodities
especially hard.
Exchange rates
The Chinese Yuan remains
weak vs. the USD. The EUR is
also weak vs. the USD, but
has strengthened.
Oil prices
Brent oil is now about $115
per barrel. This will support
demand in energy exporting
countries, but stifle demand
in energy importing
countries.
Macro Barometer / Global Quotes and Auctions
Export volumes
Global exports have been
weaker than expected in
quarter one. While weaker
supply is a factor, high price
is also a big driver.
Retail demand
A recent survey in the UK (by
the ONS) indicated that 40%
of consumers are buying less
when food shopping due to
inflationary pressures.
Global dairy demand
Consumption appears to be
easing with retail sales and
exports slowing, but there is
still a security of supply
challenge for buyers.
Customer Report June 2022
/ Global Price & Futures Market
Global Quotes and Auctions
Published price changes since last market report (€/t)

Cheddar Butter SMP WMP

EU €5,625 EU €7,388 EU €4,113 EU €5,190
(Trigona) (EEX) (EEX) (Dutch)
NZ €5,245 NZ €5,355 NZ €3,830 NZ €3,660
(GDT) (GDT) (GDT) (GDT)

US €4,595 US €6,010 US €3,835 US N/A

(CME) (CME) (CME)

Customer Report June 2022

9
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Market Overview / Global Milk Supply / EU-27 Milk Supply / Dairy Demand Snapshot / Macro Barometer / Global Quotes and Auctions / Global Price & Futures Market
Global Price Trends and Futures Markets

Butter: EEX and NZX Settled Price and Futures (€/Tonne) Powders: EEX and NZX Settled Price and Futures (€/Tonne)
4500
7750
7500 4250
7250
7000 4000
6750
6500 3750
6250
6000 3500
5750

€/Tonne
€/Tonne

5500
5250 3250
5000
4750 3000
4500
4250 2750
4000
3750 2500
3500
3250 2250
3000
2750 2000
2500
2250 1750

May-21

May-22
Jan-21

Mar-21

Jan-22

Mar-22
Nov-20

Jul-21

Nov-21

Jul-22

Nov-22
Sep-21

Sep-22
May-21

May-22
Jan-21

Mar-21

Jan-22

Mar-22
Nov-20

Jul-21

Sep-21

Nov-21

Jul-22

Sep-22

Nov-22
Butter EEX Butter NZX SMP EEX SMP NZX WMP NZX

Customer Report June 2022

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Market Update Product Update Ornua’s Business

Market Overview / Global Milk Supply / EU-27 Milk Supply / Dairy Demand Snapshot / Macro Barometer / Global Quotes and Auctions / Global Price & Futures Market
Milk Overview

Milk Outlook
EU-27: New Zealand:
EU-27: Collections should return
Collections fell again in April versus solid growth last year. April output was down by -5.6% in volume with poor to growth in the second half of
Weaker German, French and Dutch flows offset growth in pasture conditions impacting. While weak, flows are the year versus a weak base,
Poland, Italy and other Eastern European countries. being compared to a strong base. though annual growth will be
minimal.
UK: Flows are expected to
recover in the second half of the
UK: Summary:
year, but annual collections are
forecast to fall by about -1.0%.

April collections fell again and remain below the three-year Global flows fell again in April. The rate of US: Robust growth in the second
average. Processors continue to raise milk prices to offset decline increased versus March but this half of the year is unlikely with
the USDA expecting annual
rising input costs and encourage production. was compared to a strong 2021 base. growth of +0.3%.
NZ: Production for the 2021-22
season (June-May) is likely to fall
by about -4.3%. Pasture quality
US: coming into the new season will
be a key watchout.
Production fell in April compared to a strong prior year
base. Output was higher based on milk solids and cow
numbers were stable month-on-month.

Customer Report June 2022

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Market Update Product Update Ornua’s Business

Milk / Cheese / Butter / SMP / WMP / Casein

Cheese Overview

Cheese Outlook
EU-27: New Zealand:
EU-27: With buyers looking to
Despite weak demand signals, tight availability and a Exports are down year-to-date compared to a strong cover quarter three
recent pick up in interest for quarter three delivery means 2021. However, shipments rose again in April driven by requirements against a backdrop
the market appears to be well supported. strong Chinese and Japanese demand. of tight availability, it is unlikely
prices will fall in the short-term.

UK: While total cheese imports

stabilised in recent months,
UK: Summary: cheddar imports remain below
historic averages.
Cheddar output remains solid with retail sales returning to European retail and export demand US: Stocks are high and prices
2019 levels. However, availability remains tight with weak slowed, but tight availability and a recent may stabilise at current levels,
imports and a recovery in exports affecting supply. pick up in interest means prices are though muted global supply and
competitive pricing may
stable. stimulate exports.
NZ: While exports are down
US: year-to-date compared to a
strong 2021 base, shipments
Stocks rose in April and are now at record highs. This increased again in April driven by
suggests that output has been strong with demand weaker strong Asian demand.
in recent weeks. Prices eased as a result.

Customer Report June 2022

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Market Update Product Update Ornua’s Business

Milk / Cheese / Butter / SMP / WMP / Casein

Butter Overview

Butter Outlook
EU-27: New Zealand:
EU-27: While production was
Retail and export demand fell in March with prices easing Exports rose again in April driven by strong Chinese weaker in quarter one, output is
in early/mid-May. However, a pick up in interest for quarter demand. GDT prices fell in May, though solid demand likely to stabilise versus a weak
three requirements saw prices recover. from Asia helped halt the slide. prior year base. Indeed, the
Commission forecast output to
be flat this year.
UK: Like cheese, the UK is
UK: Summary:
becoming less reliant on imports,
though imports did improve in
There were also reports of lower butter prices in early/mid- March.
May as availability improved, though the market stabilised European butter prices recovered after a
US: The lack of growth in April
as buyers moved to secure product for quarter three. quiet period with buyers keen to cover stocks suggests availability will
quarter three requirements. Solid cream remain tight into the second half
demand is also providing support. of the year. However, futures
indicate prices will be flat to
slightly weaker.
US:
NZ: The gap between GDT and
Stocks increased in April, but the rate of growth was lower EEX butter pricing is bigger than
than historic norms against a backdrop of muted usual. Prices should converge,
production and solid demand. Prices firmed as a result. though this is not reflected in
dairy futures.

Customer Report June 2022

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Milk / Cheese / Butter / SMP / WMP / Casein

SMP Overview

SMP Outlook
EU-27: New Zealand:
EU-27: Exports will continue to
After rising for 9-months, prices eased in early-May and Exports increased in April with strong Southeast Asian be affected by tight availability,
converged towards US and Oceania levels. However, demand offsetting weaker Chinese demand. However, though the Commission is
expecting output growth of
interest picked up recently with the market stable to firm. GDT pricing fell in May as Chinese buying eased further. +1.5% this year compared to a
weak base.
China: Imports could fall by -20%
China: this year depending on the
Imports are down -20% year-to-date to April. While this is Summary: impact of COVID restrictions and
currency movements. Positively,
compared to a record 2021, volumes had eased before Supply remains tight and prices high, Shanghai restrictions will be lifted
COVID lockdowns were initiated in April. though weaker Chinese demand from June 1st.
encouraged buyers to step back. However, US: Weaker domestic
prices have been stable to firm in recent consumption and an easing in
port congestion should see
weeks.
US: availability improve in the second
half of the year.
While domestic consumption has been weak, stocks are NZ: New Zealand origin typically
lower due to weaker milk supply and an exceptionally holds an €80/t premium over EU-
strong export performance last year. 27 origin in quarter three, though
futures suggest European prices
will continue to be more
expensive.

Customer Report June 2022

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Milk / Cheese / Butter / SMP / WMP / Casein

WMP Overview

WMP Outlook
EU-27: Argentina:
EU-27: Production and exports
Exports fell again in March with tight availability limiting Exports are up +20% year-to-date with growth in milk are forecast to fall this year,
trade. The market has become more domestically focused flows supporting production. While Brazilian demand though European prices should
decreased, shipments to Algeria and China increased. remain at a premium to global
with returns in Europe exceeding those elsewhere. levels through quarter three.

China: New Zealand exports fell

China: Summary:
After a strong start to the year, imports fell in March and European prices are a little weaker but
April before COVID restrictions were introduced. Interest continue to maintain a significant premium
was also quiet at GDT auctions through April and May. over other regions. Globally, prices eased in
recent weeks with reduced Chinese
demand impacting.
in April which suggests May-June
imports will be down with
weaker currency and COVID
lockdowns continuing to impact.
NZ: Prices are usually lower than
European levels at this time,
though the gap is bigger than
usual. Futures suggest pricing will
firm.

New Zealand: Argentina: While output has

been solid, stocks are lower after
Exports moved lower in April. After falling in April, the a period of strong exports. Prices
‘regular’ GDT price stabilised in May while the ‘instant’ have been reported higher than
Oceania levels, but lower than
price fell after making gains in March-April. European levels.

Customer Report June 2022

15
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Milk / Cheese / Butter / SMP / WMP / Casein

Casein Overview

Casein Outlook
EU-27:
EU-27: Muted milk flows will
While domestic demand continues to ease, stocks are at a likely keep production and
low level which is affecting exports to most major availability tight throughout the
destinations. Indeed, exports are down -20% year-to-date. summer, though end users are
building resistance at current
price levels
Summary:
US: Imports are likely to remain
Americas: European stocks remain at low levels with strong against a backdrop of high
muted milk flows limiting production. natural cheese prices, though
Imports were flat in March after strong growth in January Security of supply remains a priority for increased availability is causing
and February. While shipments from Ireland and New buyers despite rising prices. price divergence between EU
Zealand fell, imports from Argentina and India increased. origin and other regions.
NZ: Exports should remain
supported by an uplift in
Southeast Asian demand and
solid US interest, though exports
New Zealand: typically ease after reaching peak
Exports continued to rise in April. Shipments of rennet casein in May.
to Mexico are starting to recover while shipments of acid
casein to the US remain strong.

Customer Report June 2022

16
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Milk / Cheese / Butter / SMP / WMP / Casein

Ornua at a glance

Agri-food Great tasting grass-fed

co-operative Irish dairy products

Ireland’s largest
Bringing the unique taste of Irish exporter of primary
dairy to the world dairy products

Exports to over
110 countries A c.2,000
worldwide strong global team

Market Information Product Information Ornua’s Business

About Ornua / Product Portfolio / Irish Dairy

Our Product Portfolio

Ornua Trading & Ingredients Ireland is

responsible for the procurement of Butter Casein/Caseinates
products from Irish dairy processors • Salted sweet cream • Acid Casein
butter • Rennet Casein
and third party suppliers, and the sale
of dairy ingredients to global food • Unsalted sweet cream • Sodium Caseinate
butter
manufacturers. • Calcium Caseinate
• Lactic butter
OTII manages market volatility for our • Whey butter
customers through;
 Managing risk with predictive
models and hedging tools Milk Powders Cheese
• Cagliata
• Full Cream Milk Powder
 Investment in trading expertise • Cheddar with Red Chilli
• Skim Milk Powder
 Differentiated value-added • Coloured Cheddar
• Buttermilk Powder Cheese
ingredients • Fat Filled Milk Powder • Hard Grating Cheese
 Fixed milk price contracts • Whey Powder • Irish Emmental Cheese
• Skimmed Milk • Mallo
 Diversifying markets Yogurt Powder
• Monterey Jack
• Whey Permeate
• Mozzarella
Click on any of our products on the • Red Leicester Cheese
right to learn more about them. • Regato Cheese
• White Cheddar Cheese
Customer Report June 2022
18
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About Ornua / Product Portfolio / Irish Dairy

Irish Dairy

On average, an Irish
Grass-fed cows milk dairy cow produces
is rich in natural

Irish cows are beta- Ireland has an 5,000

grass-fed up to average herd size of

300 days carotene 75 cows litres

of milk a year

Average dairy 550yrs

farm size is

81% of agricultural
land in Ireland is
used to grow grass
Ireland is the most
carbon efficient milk
producer in the EU
55ha Safeguarded by
time-honoured
farming traditions

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About Ornua / Product Portfolio / Irish Dairy

Ornua Co-operative Limited Head Office Disclaimer: The information in this report, which does not purport to be comprehensive, has been provided by Ornua Co-
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