European dairy commodity markets have shown some signs of moderation in June and July according to DairyCo.
It says with the exception of cheese, the decline in prices has been considerably less than in the previous four months. According to the most recent data from the USDA, EU-28 commodity prices fell between May and June but have stabilised in the first two weeks of July. Average wholesale prices dropped by 0.5%, 0.8% and 2.2% respectively for butter, SMP and WMP. Cheese prices saw a greater drop, declining by 4.0% on average over the month.
DairyCo says strong export performance for EU butter, SMP and WMP in the first four months of the year on the back of globally competitive prices is helping to minimise the build-up of stocks and providing some support to these markets.
The opposite was the case for cheese, with a drop in export volumes adding pressure to markets with Russia behind drop in EU cheese exports. EU exports to Russia between Jan-May were down by almost 12,000 tonnes (11%) compared with 2013. Russian import bans on some Member States and the weakening of the Russian Ruble are likely to have influenced this latest development.
However, DairyCo do state that demand has been weakened by the beginning of the holiday period in Europe and the continued strength of milk production indicating further potential drops in prices.
Uncertainty surrounding export demand from China and the impact of the political situation with Russia on EU exports are also reported to be keeping markets quiet.