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European skimmed milk powder (SMP) prices continued to spiral down in the past week.
At the end of September, the European Commission’s intervention scheme closed its doors for 2017.
In the absence of this market backstop, European dairy markets have pushed SMP prices down by a further 5% since the start of October.
In recent days, SMP has traded around the €1,550/t mark, which is almost €150/t below the intervention price and the lowest since the market crash in 2009.
With increased milk supply expected from some large producing regions this year, a bearish attitude has taken hold in many corners of the dairy market.
This weaker outlook has taken some heat out of markets, with European quotes for butter and whole milk powder (WMP) also in retreat. The Dutch price of WMP has fallen €100/t in the last week below €2,900/t, while butter prices have declined €450/t in the last 10 days below €6,500/t.
With the intervention window now closed for 2017, the European Commission confirmed an additional 31,000t of SMP had been sold into intervention this year, with 11,000t of this sold in the last week of September. No Irish SMP entered intervention last year.
This means EU processors have sold a cumulative 405,500t of SMP into intervention since 2015. While it has created a market floor, this overhang of product has also served to drag any meaningful recovery in milk powder prices.
The EU said it expects to sell 150,000t of SMP out of intervention next year as demand picks up.
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