Oil markets have risen to their highest level since 2014 thanks to a combination of lower production from Russia and Venezuela and rising geopolitical tensions between the US and Iran.
Oil traders pushed the price of Brent crude oil above $75/barrel this week and expectations are that prices could rise as high as $80/barrel.
For dairy markets, the rising price of oil is significant. Oil-producing countries account for one third of global dairy imports and are especially important when it comes to milk powder markets. Any improvement in the buying power of these oil economies will be welcomed by dairy sellers.
Mirroring the rising oil price, dairy markets in Europe have made further gains in the last week. The price of butter continues to rally as stocks remain tight against a backdrop of strong buyer demand. Prices rose a further €150/t this week, according to the Dutch Dairy Board, to reach €5,700/t.
On the powder side, developments were even more positive. Skimmed milk powder (SMP), which has been on the floor for months, saw some much-needed upward momentum this week, with prices rising almost 7% in the last week above €1,400/t for the first time since last November.
The lift in SMP markets comes despite the fact the European Commission sold almost 25,000t of SMP out of intervention this week. The Commission set a minimum selling price of €1,050/t for this week’s tender, and received bids ranging from €500/t to highs of €1,750/t.
SHARING OPTIONS