Uncertainty in global dairy commodity markets pushes prices downwards
And prices at last week’s global dairy trade auction, run by New Zealand milk giant, Fonterra, fell to a 14-month low, after the company revealed record milk flows to its processing plants. The decline was led by a 7.2% tumble in prices of rennet casein, an additive to cheese.
It is attributed to Fonterra’s jump of 13% in milk collections, year-on-year, due to fine autumn weather and reasonable winter conditions in New Zealand resulting in record spring milk flows.
Output in the EU, running 2% higher than levels one year ago, and in the US, is also ahead of forecasts.
According to LTO, global demand is generally steady or softening, and confidence which led to firmer dairy commodity prices earlier in September has been eroded.
Globally, the dairy market now depends on enough buyers for increasing production, in the face of weakening economic growth expectations.
For the moment, EU market prices were stable. says LTO. But activity was sluggish. International demand was mostly driven by currency movements, with the weaker euro against the US dollar a positive factor for EU exporters, making EU skim milk powder, cheese and whey powder more competitive. Export demand remains good. Butter and whole milk powder prices in the EU, however, are often higher than international buyers are willing to pay, and export demand is trending lower.
- Meanwhile, the LTO milk price report for August 2011 deliveries to 16 major EU processors showed the highest ever calculated milk price average, at €35.89 per 100 kg of standard milk, 9.2% higher than 12 months earlier. Only the average calculated milk price of August, 2008 (€35.57) came near this average.
