The Commission's latest short-term agriculture outlook notes that current European skimmed milk powder (SMP) and butter prices returned a milk price equivalent of 35c/l in June.
"The butter market remains undersupplied, despite the increased availability of milk in Europe. This is due to very low stocks and lower milk collection in France, the Netherlands and Ireland, three of the EU’s main butter producers. In addition, butter production in Germany went down. It is expected that the price of SMP will continue its current upward trend and then stabilise in the course of the year," EU experts wrote.
This spring, the EU milk price was below the levels seen both last year and on average in the past five years. However, "an increase is expected later this year", according to the Commission. "This follows the seasonal pattern and the current rise in dairy product prices, driven by EU and global demand."
Overall EU milk production is now expected to increase by 1.2% this year. Elsewhere in the world, the report notes that New Zealand has stabilised its production after two years of decline, while Australia, the US and Argentina are all increasing milk collections.
World demand
"Overall, stronger world supply is putting some pressure on prices. However, world demand remains strong and supports world market prices," the Commission found.
This is especially true of SMP, with EU production reduced this year because of falling milk collections in France and Ireland. The Commission is taking advantage of these market conditions to offload its intervention stocks, with 150,000t now forecast to be sold out of the scheme this year.
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The Commission's latest short-term agriculture outlook notes that current European skimmed milk powder (SMP) and butter prices returned a milk price equivalent of 35c/l in June.
"The butter market remains undersupplied, despite the increased availability of milk in Europe. This is due to very low stocks and lower milk collection in France, the Netherlands and Ireland, three of the EU’s main butter producers. In addition, butter production in Germany went down. It is expected that the price of SMP will continue its current upward trend and then stabilise in the course of the year," EU experts wrote.
This spring, the EU milk price was below the levels seen both last year and on average in the past five years. However, "an increase is expected later this year", according to the Commission. "This follows the seasonal pattern and the current rise in dairy product prices, driven by EU and global demand."
Overall EU milk production is now expected to increase by 1.2% this year. Elsewhere in the world, the report notes that New Zealand has stabilised its production after two years of decline, while Australia, the US and Argentina are all increasing milk collections.
World demand
"Overall, stronger world supply is putting some pressure on prices. However, world demand remains strong and supports world market prices," the Commission found.
This is especially true of SMP, with EU production reduced this year because of falling milk collections in France and Ireland. The Commission is taking advantage of these market conditions to offload its intervention stocks, with 150,000t now forecast to be sold out of the scheme this year.
Read more
Milk price review: big jump in milk prices for 2017
Milk price review: Lisavaird holds top spot for 2017
Dairy markets: high prices hurting butter retail sales in Germany
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