Market analysis: European dairy prices flatten out with butter unchanged

European dairy commodity prices flattened out over the last couple of weeks with the European butter quotation unchanged since mid-October, according to multi-national financial services firm StoneX (formerly INTL FCStone).

Meanwhile, the skim milk powder (SMP) quotation saw a slight increase followed by a slight decline.

In a breakdown of where the market is at the moment to AgriLand, Dr. Peter Meehan, senior commodity analyst at StoneX, said:

“EEX futures markets meanwhile have seen some fairly substantial declines over the last couple of weeks with EEX butter’s front six months down 2.7% since mid-October while EEX SMP futures are down 5.7% over the same period.

Demand for dairy commodities remains strong with Chinese import numbers for September showing good gains on last year across most dairy commodities.

New Zealand exports for September were also well ahead of last year for most of their dairy products with strong exports to China the main driver behind the increase, the analyst added.

“European dairy exports in August meanwhile fell back behind last year across almost all commodities.

“Big export numbers in August 2019 are exaggerating the year-on-year decline a bit, although the stronger euro currency over the last three months has made European commodities a little less competitive on a global level.

Irish dairy exports were weaker for the most part in August although Irish butter exports moved back ahead of last year while WMP [whole milk powder] exports were also relatively strong.

“Milk supplies have also held up quite well putting further pressure on prices. Milk collections for the EU-28 in August remained ahead of last year [+0.4%] despite declines for the four biggest milk producers.”

Production data for September meanwhile is also showing year-on-year gains for Ireland (+1.4%); the UK (+0.8%); and the Netherlands (+0.3%), while further afield, milk supplies in New Zealand (+1.7%) and the US (+2.4%) were also well ahead of last year,” Dr. Meehan concluded.