The trend of high prices, leading to strong supplies, leading to lower prices, hopefully leading to lower supplies, continues according to ICOS’s dairy market update for May.
It says that buyers seem confident of continuing bumper supplies in Europe and worldwide, and are happy to step back from the market, somewhat. The resultant weakening in product prices will hopefully slow down the dramatic supply growth, particularly in Europe, although the die may well be cast for this season.
ICOS notes that it remains to be seen if the well reported processing capacity constraints in Britain and on the continent, coupled with discounted distressed sales of milk, will encourage producers to reduce feed levels and slow down supplies.
This week’s Eurex butter and SMP indices, at €3473 and €2863, respectively, puts milk in the 35c per litre price bracket. The Friesland-Campina May milk price equates to 33.24c per kg or 34.22c per litre, at 3.6% protein and 3.3% fat.
The IDB purchase price index for April has fallen to 128.7, down from 131.5 in March, while the Global Dairy Trade auction suffered it’s sixth successive fall, though only by just over 1%.