More Evidence That Dairy Markets Are Recovering as EU Sells 42,000t of SMP out of Intervention

There is no doubt that dairy markets are now recovering, Dairy Chairman Tom Phelan has said. 

International quotes for dairy commodities have been firming for weeks due to slower milk growth in the EU and lower volumes from New Zealand. Tellingly, this week, the EU Commission sold 42,000t of SMP out of intervention at an improved price.

Co-ops must now stop talking down milk prices, and start leveraging those higher returns for suppliers, Tom Phelan said.

“The EU Commission this week sold 41,958t of SMP out of intervention for a minimum price of €1150/t, €100/t higher than last month, showing clearly improved buyers’ sentiment. This is a total reduction of over 76,000t in the intervention stock overhang,” Mr Phelan said.

“Buyers’ understanding that the days of cheap dairy products are over is also in evidence in rising international prices, which in the last week returned between 31c/l (EU MMO) and 34c/l (average of European spots) before VAT for an Irish product mix, after deduction of a nominal 5c/l processing cost.” (see details below).

“Co-ops don’t just trade in standard SMP and butter however, with higher value fat filled powders, whey products and infant formula ingredients increasingly important in their product mixes. It is now time for co-ops to stop talking down milk prices, and to start leveraging the improved returns for the benefit of farmers,” Tom Phelan concluded.

EU Milk Market Observatory – 6th May 2018

SMP: €1410/t; Butter: €5450/t – SMP/butter milk price equivalent 31c/l + VAT

European average spot quotes – NL/DE/FR – 9th May 2018

SMP : €1472/t ; Butter : €5863 – SMP/butter milk price equivalent 34c/l + VAT

GDT average auction prices – 15th May 2018

SMP: US$2047/t; Butter: US$5787/t – SMP/butter milk price equivalent 32c/l +VAT

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