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Dairy commodity market will likely move back into balance

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MG Unit Trust (MGC) provides economic exposure to Murray Goulbourn, an unlisted public company that through its co-operative structure has the primary business of the sourcing and processing of milk into a range of dairy products. Growth in global demand for dairy products is underpinned by increasing per capita consumption trends in emerging markets. Murray Goulbourn’s Milk is low cost and from a relatively stable region, near the key growth market of Asia, and supplied by more than 2,500 supplier-owners. Current management have been in place since 2012, when the current strategy began to be implemented. They have a clear and deliverable strategy. Chart below shows that global dairy commodity prices have fallen over the last 2 years. This is a function of over supply due to the supply response from previously elevated product prices and Russia implementing an import ban from some of the major dairy producing regions. Prices are now near cyclical lows and a supply response is likely to gradually move the market back into balance over the coming years. CI Brunswick Fund Quarterly Report (VIEW LINK)


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