Encouraging trends in global and EU dairy markets will support milk prices

Encouraging trends in global and EU dairy markets will support milk prices

Encouraging trends in global and EU dairy markets will support milk prices

Milk prices in the EU are not expected to change much in the coming months, predicts the Dutch Federation of Agriculture and Horticulture (LTO) and Dutch Dairy Organisation.

And Tuesday’s Global Dairy Trade event, which concluded with the GDT Price Index up 3.7%, was also encouraging for dairy farmers.

It was lifted by a 6.7% rise in the skim milk powder price, continuing the positive 2019 market trend for that commodity, due to good demand and somewhat limited supply.

The relatively stable market situation is reflected at several of the big EU dairies, with Arla in Denmark announcing a small milk price reduction of €0.10 per 100 kg for October, and no change for November.

FrieslandCampina’s milk price falls slightly in October (€0.20), but rises in November (€0.70).

The milk price of DMK in Germany remains the same in October.

In France, the milk price of Savencia will fall slightly in October(€0.20), while the milk price of Lactalis remains unchanged in October and November.

In their review of prices paid by 16 purchasers across the EU in September, LTO and the Dutch Dairy Organisation found that the average was €33.56 per 100kg at 4.2% fat, 3.4% protein. Prices at Irish co-ops were €29.30 at Dairygold (including SDAS bonus but excluding bonuses for milk recording and herd health); €29.15 at Glanbia (including co-op support); and €30 at Kerry Agribusiness (including SDAS bonus).

“The market is positive and looks steady,” said LTO and the Dutch Dairy Organisation, reporting butter prices rising slowly since mid-August and stabilising in the second half of October.

There is still little activity on the market for whole milk powder.

EU figures show that exports in the first seven months of 2019, expressed in milk equivalent, were 6% up year-on-year, while the value of these exports increased by 12%.

Export volume strongly increased for skim milk powder (28%) and butter (19%). Cheese exports increased by 2%. Exports declined for butteroil (21%), whole milk powder (19%); and whey powder (2%)

However, the US is the main destination for EU butter exports, and a 25% tariff has been placed on much of this trade by the Trump administration. And the increase in cheese exports may come to an end, because the US was the main outlet for EU cheese exports, and will also be hit by the tariff.

Markets are benefiting from the still negative value for total growth rate in milk supplies across the major global dairy exporters (including the EU), at minus 0.2%, up to September, despite the EU milk supply increasing by 1% in August, gaining in growth compared to the previous months.

That leaves the 2019 EU milk supply 0.4% higher up to and including August, compared to 2018, with the first signs of supply increases since the 2018 drought appearing in Germany, France and the Netherlands.

For the second month in a row, the Dutch milk supply increased.

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