The winter predictions, that the EU’s mountain of skim milk powder overhanging global markets could hold back milk prices until 2018, gained credence with this week’s Global Dairy Trade auction indicator taking skim prices to an eight-month low.

In several tender offers, the European Commission has sold less than 100 tonnes of its 354,000 tonnes of skim milk powder, bought into intervention storage over the past two years in order to soak up 4.5m tonnes of milk on depressed markets.

Pressure is growing on the EU to sell skimmed milk powder at prices buyers can afford, but the Commission has said so far it will not sell powder at low prices which could upset the dairy market balance and price recovery.

It rejected bids received for a small tonnage in the latest powder sale.

The Commission warned during the winter that it could take two years or more to sell the intervention powder.

Although skim milk prices fell 10.1% at this week’s GDT auction run by New Zealand milk giant Fonterra, the overall price average gained 1.7%, following a 10% fall in the two previous auctions.

Along with the EU’s skim powder overhang, markets are affected by slower Chinese dairy imports so far in 2017, and reports that the US dairy industry is gearing up to increase exports this year, as its cow herd reaches its highest level since 1996.

Meanwhile, the Russian market remains closed to most big dairy exporting countries, and steadily declining dairy produce consumption is reported from Russia, attributed to consumers rejecting the growing share of counterfeit products in the market.

In February, milk suppliers to the top paying Irish co-ops got up to 36 cents per litre, including bonuses, and VAT at 5.4%. 

And farmers across the country who successfully submitted payment requests in the EU’s Voluntary Supply Management scheme will receive €6.5m, expected by the end of March. The average payment per farmer who took part is expected to be €1,800.

Across the EU, only a 15-20% drop-off between initial applications and payment requests in phase one of the €150 million scheme is reported. 

This will mean a payout of about €120m, with about €30m of the scheme’s budget returned unused to the general EU budget.


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