Since the announcement of the Russian import ban on August 6, average prices of dairy products have decreased by as much as 28% in the case of skimmed milk powder (SMP).

According to latest figures from the Milk Market Observatory price reductions also included: -22% for Whole Milk Powder (WMP), – 12% for cheddar cheese, – 11% for butter, -11% for gouda cheese and – 6% for whey powder.

Reductions come in the wake of storng EU milk supplies. The observatory says the EU cow’s milk collection increased by 4.9% in September 2014 compared to the same month last year. The cumulated deliveries in the first nine months of 2014 were 5.5% higher than in year 2013.

The increased supply has lead to the production of 26.0% more SMP, 11.2% more WMP, 4.8% more cream, 4.1% more butter, 2.6% more cheese, 2.4% more concentrated milk and 0.1% more drinking milk. Negative figures were only reported for fermented milk (-2.9%).

Meanwhile the observatory figures also show that the weighted EU average farm gate milk price decreased in September 2014 by 1.1% to 36.5 c/kg, which is 5.0% lower than in September 2013 and 168% of the virtual intervention price.

Prices on spot milk markets have slightly trended downwards in the last weeks. In Italy, the spot milk price decreased by 0.7% between weeks 39 and 45 (from 36.8 to 36.5c/kg), meaning a 28% decrease compared to last year.

In the, Netherlands the spot milk price decreased by 1.4% between weeks 41 and 45 (from 34.5 to 34.0c/kg), and is 29% below last year levels.

Before the import ban, Russia was the main outlet for EU butter and cheese exports. Butter exports to Russia are now on par with last year and cheese exports decreased by 30%. Algeria is by far the main outlet for EU exports of milk powders, and has increased EU-origin SMP imports by 137% and WMP imports by 176%. China, Indonesia and Egypt are also very dynamic importers of European SMP.