Welcome to our weekly market update, in which we will tell you about the developments in dairy the past week and our expectations for coming week.
Welcome to the last OpenDairy market update of the year! A year of political unrest, inflation and skyrocketing energy prices. We've seen the dairy prices move up in this sentiment and correct downwards just as violently. We will look back on 2022 and try to make sense out of what 2023 will have in store for us.
In 2022, the milk prices grew along with the spike in commodity prices. However, the milk prices did not follow the correction downwards. This, in combination with a lack of demand resulted in growing surpluses and a weakening market. Today we are picking up the pieces and wonder where the market will go in 2023.
In order to reach some stabilization, demand needs to return globally. Chinese demand is expected to show little growth next year as local demand will be satisfied by an increase in local supply. The rest of global demand showed a very mixed bag. Some countries show double digit growth in imports, others the same in decline. We expect this is due to different stock levels at the buyer side.
On a macro level, the world demand for dairy is still growing. Forecasts for 2023 show very limited growth in global supply. Milk prices are not the only driver of supply anymore. Some regions simply can't grow, due to environmental restrictions. Before COVID hit the world, this was the situation we were facing. Growing demand and limited supply growth. We don't see stabilization on the short term, but it's good to keep a close eye on demand developments.
Thank you for your attention, have a great holiday season and we look forward to serving you in 2023!