Podcast Desccription
Is the dairy market showing early signs of recovery, or are supply pressures still in control? In this month’s Forecast Update Live, the Ever.Ag Insights team breaks down the latest forecast, including strength in nonfat dry milk, stable butter and cheese outlooks, and ongoing global production growth. Phil Plourd and Matt Gould debate the bull and bear cases, assess domestic and international demand, and explore whether U.S. cheese consumption may be reaching “peak pizza,” delivering clear, practical insight for producers and market participants.
Transcript
00;00;00;23 – 00;00;12;22
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00;00;12;24 – 00;00;36;02
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Hello and welcome to Forecast Update Live, a video series from Evraz Insights, where each month we gather to discuss our dairy market forecast. I’m your host John Spain. Our. We’re joined today by Philip Lord and Matt Gaul to get us started. Phil, run through the highlights of this month’s forecast compared to last months. Yeah, there’s a couple of areas where we haven’t really done much.
00;00;36;04 – 00;01;09;21
Unknown
We’re still pretty comfortable with our outlooks on butter and cheese, so not really made changes there. Similarly way I think we’ve we’ve moved up a touch here on the front end. But the real noise in news this week is around the nonfat dry milk market which after a multi-month ugly multi year, slumber, has, shaken awake. And I think, you know, looking at some of the underpinning fundamentals behind what’s going on, you know, we’ve, we’ve had to boost our nonfat forecast a fair amount on the front half of the year.
00;01;09;24 – 00;01;30;00
Unknown
Thanks, Phil. Okay. Every month we ask our panelists to take either the bull side of the story or the bear side of the story. Matt, let’s start with you this month and see what you’ve got to say about the bear side of the story. Thanks, John. The fundamentals of the dairy market have been bearish for it’s felt like month after month after month.
00;01;30;02 – 00;01;59;10
Unknown
The driver of the kind of bearish setup has been this massive growth in supply, where the US is growing at more than 4% growth rates, and Europe is growing at some of the fastest rates in the last decade. New Zealand too, is at record milk production after having a couple of years where they traded sideways. So the supply side of the story that that took us to a very bearish place is almost or maybe entirely intact.
00;01;59;13 – 00;02;20;07
Unknown
The economic signal to grow milk supply is still there in the US. The insights team has done a wonderful job adding up beef income to the milk revenue. And when you do that, you see that that, you know, with the exception of a few few bad months recently, farmers have been been okay as we’ve as we weathered the storm.
00;02;20;13 – 00;02;39;26
Unknown
Then as we look forward, it looks it looks to us like there’s still a green light to grow supply here in the US and also in Europe. And so the supply story that that had us bearish to begin with is still there. And then the demand part of the story from a high level still seems largely intact to globally.
00;02;39;27 – 00;03;05;06
Unknown
We’re still seeing, I’ll say, challenges related to demand particularly out of China. And that we’re still seeing their milk supply grow and we’re still seeing what is weak fluid milk sales there. We have lots of competition in the international market for most products. And then here at home we are finishing scaling up record investment in cheese plants. And so we have plenty of cheese around.
00;03;05;08 – 00;03;27;15
Unknown
I know a guy if you need some you know. And so the idea that we have lots of supply and demand that is not particularly noteworthy, I think is is still in place today. And if you’re, if you want to be bearish. And I think those are those are the things that you would point to. Thanks, Matt. Okay, Phil, it’s time for you to take the bull side of the story.
00;03;27;15 – 00;03;47;21
Unknown
What are you seeing out there that could possibly take prices higher? I think a couple of things, but I’m not sure that they’re novel. You know, the kind of default posture to take in this kind of environment is that low prices cure low prices. But you take that posture because historically, that’s been true, right? So what is price do price, you know, regulates supply and demand.
00;03;47;22 – 00;04;08;26
Unknown
And in this environment we arguably need less supply and more demand. You know, so the flip side of what Matt was talking about is where we’re at is, you know, a lot of supply and so-so demand. And but I do think that there are on the edges, you know, better promotional activity around butter and retail, for example, you know, questions about low milk prices and U.S. farm supply.
00;04;08;26 – 00;04;42;25
Unknown
You know, that’s a little choppy. But, you know, European prices are lower. So we are seeing farm income drop. Not really fast, not necessarily perilously. But you know, those things are slowly unfolding. So I think that we’re selling some of those things in motion. I think there’s a the most compelling story is also one that’s hard to quantify, but I just wonder if because the supply side has been so powerful over the past 12 to 18 months, if it’s obscuring a demand story that’s not terrible in the background, writ large globally.
00;04;42;28 – 00;05;01;28
Unknown
So if you look at, you know, some of the graphs that that Zuko in our Australian office puts together, when you look at the global trade in dairy solids, 2025 was actually a pretty good year. Yeah, we could pick on us cheese or this or that. China powder. But overall, we saw a pretty good growth in dairy trade in 2025.
00;05;02;01 – 00;05;28;06
Unknown
And I think that reflects lower prices restocking in countries that had deep stocked in 21 2223. And I think it’s possible that there’s some demand momentum that carries past to where the some of the supply signals cross and go lower or cross the supply signals and goes lower. It’s a little bit out there and fuzzy. But, you know, we’ve been blinded by supply.
00;05;28;07 – 00;05;46;18
Unknown
And maybe once we get through that a little bit, the demand stories a little bit better than we think internationally. And so low prices care, low prices and maybe better demand in the background than you would think. Maybe just a little snippets of that in powder right now. So those are the bull cases as far as I’m concerned.
00;05;46;20 – 00;06;09;10
Unknown
Okay. Thanks Matt and Phil. Okay, Phil, every month you bring us what you call your favorite look. It’s a chart I always look forward to seeing. And I’m excited to see what you’ve got for us this month. Yeah, this month we’re riffing on a story that appeared in the Wall Street Journal a few weeks ago that that basically asked the question, are we at maximum pizza in the United States?
00;06;09;12 – 00;06;39;15
Unknown
And as hard as it is to believe we may be, this one’s favorite look is the number of pizza restaurants in the United States. And if you look at that graph, we’ve seen, you know, periods of nice growth historically over the years, some some big jumps, even. And that coincides not well. And at the same time in this country, we saw mozzarella production grow at a rapid rate, such a rapid rate that it overtook cheddar production at one point.
00;06;39;18 – 00;07;08;26
Unknown
So pizza has been a tremendous driver of consumption growth in the US. But since 2022, the number of pizza at restaurants has leveled off. And if you were to look at a graph of rolling per capita cheese consumption, it’s also leveled off beginning in 2022. So the points that we’re making the Wall Street Journal made is that a pizza no longer owns the delivery space, where you can tap your phone four times and get just about anything delivered to you.
00;07;08;28 – 00;07;30;25
Unknown
B we’ve seen C store chains like Casey’s expand by 2000 stores over the course of the past 15 years, and bring pizza with it, right? Casey sells 40 million pizzas a year. Well, what that means is that there’s always no unexplored territory for pizza in the United States. You know, there’s almost nowhere where you can’t get a hot pizza.
00;07;30;28 – 00;07;53;06
Unknown
And so we might be tapped out there. You got GLP one medications, kind of pizzas, sort of on the naughty list there. Restaurant food. And so maybe a few forces conspiring against pizza and maybe the unthinkable that we’ve actually stuff the average American with as much as possible. Well, we’ve talked about peak oil before, but it sounds like today we’re talking about the possibility of peak pizza.
00;07;53;07 – 00;08;14;01
Unknown
Eat pizza. Who’d have guessed? Yeah. I’ll wait a few years to throw in. I’m not sure. Mind you, I’m not sure, but it’s possible. Yeah, and that certainly hasn’t slowed down in our household, so that’ll do it for this month’s episode of Forecast Update Live. Thank you to all of our panelists. Thank you to everyone on the Ever AG Insights team for all the work on the forecast.
00;08;14;06 – 00;08;36;08
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And thank you, the viewers, for tuning in. If you don’t receive our forecast update and would like to subscribe, please reach out via email at Insights at Ever Egg. If you like this video, be sure to subscribe on our YouTube channel. Give us a thumbs up and share with a friend. We’ll see you next month for another edition of Forecast Update Live.
