The latest report from the European Milk Market Observatory (MMO) highlights growing supply and price risks for butter and skimmed milk powder (SMP). By: Thomas Hubert
Asian importers have propped markets through their recent recovery, with China’s purchases of dairy products up 27% on last year and southeast Asia’s 12% higher. Overall, global dairy imports are up 6% on last year.
The extra demand is crucial as production is now increasing in all major export regions, the European dairy trade association Eucolait noted in its contribution to the MMO report.
Within the EU, the European Commission’s July figures show that a production drop in France, the Netherlands, Denmark and Germany has been more than compensated by a rise in Ireland, Italy, Portugal and the UK.
Fresh record for butter price
The market continues to tell radically different stories for fat and protein products, with a four-to-one price gap in favour of butter – now approaching a fresh record of €6,500/t. “Given the record dairy fat prices, the structural lag in the dairy supply chain, growing global supplies and increased export competition, are we reaching a tipping point in the EU market balance?” Eucolait wonders.
Although the weakening US dollar is having a negative effect on EU exports, the Commission’s assessment is that “milk prices are expected to remain firm in the coming months despite a possible price drop for butter (correction from record levels) and SMP (expiry of public intervention)”.
Intervention is now closing for this year and processors rushed to avail of the scheme last week, nearly doubling the volumes of SMP sold into the scheme to 5,512t. No Irish SMP has entered intervention this year.
Source: Irish Farmers Journal