Pressure on UK dairy commodity markets
According to DairyCo, healthy milk supplies, along with the strengthening of Sterling against the Euro has put downward pressure on some dairy commodity markets. Lower demand for cream and butter has added further downward pressure to prices, while strong global demand for powders has provided support.
Cream and butter prices dropped steadily through the month, with prices in January down on average by £150/tonne (9%) and £175/tonne (5%) respectively. DairyCo analysts point out that buyers are only entering the market for short term cover as the EU moves towards peak milk production. Good supplies of cream and butter on the back of ample milk availability along with increased import competition as butter stocks from New Zealand have come onto the market, has put downward pressure to prices. The situation has been further impacted by the strengthening of Sterling against the Euro in the latter part of the month.
Prices for SMP remained unchanged in January at £2,775/tonne. While supplies are reported to be increasing, demand has been sufficient to keep prices firm. Global demand remains strong and the unanticipated announcement of a further Algerian powder tender has also supported the market. EU and UK prices remain competitive, keeping export markets open.
Cheese markets are reported to have been quiet during January and prices have remained unchanged.
DairyCo has also published a summary of EU producer prices. The November EU28 weighted average price stood at €39.98/100kg (34.52ppl), up €0.56/100kg (1.4%) on the previous month.
Meanwhile, the November EU27 weighted average milk price also stood at €39.98/100kg (34.52ppl), up €0.56/100kg (1.4%) on the previous month, an increase of 0.14ppl. Compared with the previous year the weighted average EU27 price for November was up €5.91/100kg (17.3%), an increase of 6.34ppl.
The average UK farmgate price in November stood at €39.91/100kg (34.46ppl), which was the twelfth highest price of any nation in the EU15 after Finland, Irelansd Greece, Netherlands Denmark, Germany, Sweden, Austria Belgium, Luxembourg and Italy.
The EU15 weighted average price stood at €40.61/100kg (35.07ppl) in November, €0.44/100kg (1.1%) up on October and €5.89/100kg (16.9%) higher than the November 2012 average.
Looking at the top-five milk producing countries (Germany, France, UK, Netherlands and Poland), the average November price was €39.75/100kg which was a €1.08/100kg (2.8%) increase compared with the previous month.