Improved EU dairy market, says MMO
A 5% fall in the GDT Price Index in New Zealand on Tuesday compared starkly with improved dairy market sentiment reported at last week’s EU Milk Market Observatory meeting.
Slowdown of milk output growth, coupled with solid demand, is the picture in the EU, with a rapid butter price surge to nearly €6,000/tonne, and skim milk powder prices also improved in the last two months, up 17%, despite disposal of some 100,000 tonnes from intervention stocks.
But butter prices down 4% and skim prices down 4.6% was the result in the GDT auction, which may have been affected by the trade war looming between the US and much of the rest of the world.
EU skim stocks have gone to below 280,000t.
With low availability of privately owned stocks of skim, strong demand should accompany price recovery alongside the release of further public stocks, according to the Milk Market Observatory (MMO).
Increased cheese production is translating into higher stocks, but consumption is robust.
World milk production has moderated to growth of only 1.9% by April, mainly due to the slowdown in the EU and the US.
Global dairy exports are booming, so far this year, according to the MMO.
The share of China in EU exports (in value) keeps increasing, followed by the US and Hong Kong.
EU cheese exports by April were on a par with 2017, but a slowdown could be expected in the light of rising prices.
EU and world SMP exports are positive, confirming robust global demand, even after world trade doubled in nine years. EU butter exports are flat this year, with buyers favouring more competitive product from Oceania, Ukraine and Belarus.
But deteriorating US trade relations with major partners such as China or Mexico could alter export flows in the coming months.
The MMO meeting also heard about upcoming futures contracts for liquid milk to be launched in August 2018 by the EEX Group commodity exchange, allowing hedging of milk prices.
n As usual, it’s a mixed market picture for co-ops here, under pressure to lift prices after IFA Dairy Chairman Tom Phelan highlighted a €7,000 annual milk payment gap between the top and bottom of the milk price league.
ICMSA President Pat McCormack zeroed in on the milk price gap between Glanbia Ireland and other processors, saying ICMSA was inundated by calls from very unhappy Glanbia suppliers who expect that their milk price should be one of the best in the country.
