In the last six months or so, farmgate milk prices across Europe have rebounded strongly to their highest point in two years. Since June, the average price in Ireland has increased almost 60% and further upward gains are expected into the spring.
In the last six months or so, farmgate milk prices across Europe have rebounded strongly to their highest point in two years. Since June, the average price in Ireland has increased almost 60% and further upward gains are expected into the spring.
The primary reason for this turnaround has been the sharp improvement in price for nearly all dairy commodities as the global dairy market moves back to a net-demand position. However, questions remain around the health of the market for milk powders, particularly as buyer sentiment appears extremely brittle now.
Based on the price visibility available, the prices of both whole (WMP) and skimmed milk powder (SMP) appear to have crested somewhat in the last month. At last week’s GDT auction, the price of WMP fell 4% to its lowest level since October after just a slight increase in the volume of product offered for sale.
Futures markets, a decent bell weather for buyer sentiment, took a dim view of this result, with forward contracts for WMP declining more than 11% in price over the last fortnight. On the skim side, it is well established that the massive stocks of SMP sitting in intervention across Europe are putting a ceiling on price.
Rumours that Mexico could make an offer to buy this SMP are yet to be substantiated, but it would be a promising outlet for the product. The EU Commission is firm in its commitment that it will not let the stocks off for below market prices.
This is a subscriber-only article
SHARING OPTIONS: