It was another bad week on the dairy markets, with butter dropping by €270/t to reach €5,040/t, the lowest price in two years.
The steepness of the drop in price for European butter is phenomenal and must be unprecedented.
Ten weeks ago, butter was trading for €7,000/t, so to lose almost 30% in value in a little over two months is remarkable and horrific all at once.
The chaos on the butter side has also extended to the cheese side, with cheddar now trading at €3,580/t. Coincidentally, this is almost the same price as whole milk powder (WMP).
When you think of the different processing costs involved in making WMP versus cheese, as well as the costs of storage and carrying inventory, cheese should be commanding a far higher price. Cheese does normally command a far higher price than WMP, but the fact they are aligned now shows the malaise in the cheese market.
The Global Dairy Trade (GDT) auction also had its difficulties, but, thankfully, most of the problems related to a technical glitch, which saw the results initially displayed as a 21.9% increase in the index.
If only this was true – as the actual result was a 1.4% decline. It could have been worse. WMP took the biggest hit, dropping in price by 2.4% while SMP fell by 1.9%.
It’s interesting to note that WMP auction has fallen by almost 20% since May, yet Fonterra hasn’t adjusted forward milk price.
With a vote to get the sale of the consumer brands happening at the moment, expect prices to be cut as soon as the sale is confirmed.
It was another bad week on the dairy markets, with butter dropping by €270/t to reach €5,040/t, the lowest price in two years.
The steepness of the drop in price for European butter is phenomenal and must be unprecedented.
Ten weeks ago, butter was trading for €7,000/t, so to lose almost 30% in value in a little over two months is remarkable and horrific all at once.
The chaos on the butter side has also extended to the cheese side, with cheddar now trading at €3,580/t. Coincidentally, this is almost the same price as whole milk powder (WMP).
When you think of the different processing costs involved in making WMP versus cheese, as well as the costs of storage and carrying inventory, cheese should be commanding a far higher price. Cheese does normally command a far higher price than WMP, but the fact they are aligned now shows the malaise in the cheese market.
The Global Dairy Trade (GDT) auction also had its difficulties, but, thankfully, most of the problems related to a technical glitch, which saw the results initially displayed as a 21.9% increase in the index.
If only this was true – as the actual result was a 1.4% decline. It could have been worse. WMP took the biggest hit, dropping in price by 2.4% while SMP fell by 1.9%.
It’s interesting to note that WMP auction has fallen by almost 20% since May, yet Fonterra hasn’t adjusted forward milk price.
With a vote to get the sale of the consumer brands happening at the moment, expect prices to be cut as soon as the sale is confirmed.
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