Milk price rises in Europe
Leading milk processors across Europe are applying milk monthly price increases of 1c/l or more.

Arla Foods has announced a 1c/l increase in August for its 12,700 suppliers stretching from Sweden to the UK. Johnnie Russell, director of the co-op’s UK branch Arla Foods amba, said this would translate into a 0.81p/l increase for British farmers to 29.98p/l.

““The current market situation is characterised by strong demand and low stocks of fat and this is driving up prices for products containing fat,” Russell said. “Meanwhile, the protein market remains stable, however at a low level.”

Müller, another continental co-op collecting in the UK, said would raise its British price by 1.5p/l in August.

Three months of increases for Lactalis

In France, Lactalis, the world’s third largest milk processor, has announced a series of 1c/l monthly rises for the 5.6bn litres it collects annually in its home country. This will take the price to 34c/l in July, 35c/l in August and 36c/l in September at 4.1% fat and 3.3% protein.

“This evolution was expected by milk suppliers following the real difficulties of 2016 and must be matched by an increase in the price of our products,” said Lactalis group managing director Daniel Jaouen, hinting at tension on dairy prices across the supply chain from farmers to retailers in recent weeks. He added the new price was negotiated with producers’ organisations.

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Milk price fell globally in 2016

Dairy markets: stage is set for milk powder markets to make full recovery
Spot prices for SMP have jumped in recent weeks, as the European Commission has offloaded almost all its intervention stocks.

On Thursday last week, the European Commission announced it had sold a further 80,400t of skimmed milk powder (SMP) from its intervention stocks for a minimum selling price of €1,555/t.

This means the European Commission has now sold 380,000t of its intervention stockpile and leaves just under 22,000t of SMP still in intervention storage, which is a very positive signal for dairy markets in 2019.

Markets return to normal

The almost entire clearance of the European Commission’s intervention stockpile over the last 12 months means milk powder markets in Europe finally have a chance to return to some normality.

Since the European Commission first intervened in dairy markets in 2016 and began buying up SMP to prop up milk prices, the market price for SMP has plunged to rock bottom levels.

For much of 2017 and 2018, the spot market price of SMP was rooted to the floor at levels below the intervention price of €1,698/t.

However, in recent months, it has become increasingly clear that the European Commission was very close to offloading its intervention stocks and SMP prices have begun to rise to more normalised levels.

Highest level in 18 months

At the end of last week, the spot price for SMP on European dairy markets had risen as high as €1,850/t, which is its highest level in more than 18 months.

With only 22,000t of SMP left in intervention, prices could rise close to €2,000/t or higher in the coming months, which is a more normal price for the product.

The price of whole milk powder (WMP) has also benefited from the clearout of SMP stocks, with spot prices for WMP rising to €2,770/t last week.

Butter and cheese

On the fats side of the dairy market, butter prices have also risen in the last week and are trading in the region of €4,300/t and €4,500/t.

Cheese markets also found some upward momentum, with spot prices for cheddar lifting to €3,000/t.

Prices for gouda and mozzarella increased to €2,800/t and €3,000/t respectively.

Dairy markets: SMP prices reach highest point in 18 months
Spot prices for almost all dairy commodities started the new year on a positive note in Europe.

Dairy markets have kicked off 2019 on a positive note, with European spot prices for most commodities rising in the last week.

On powder markets, the price of skimmed milk powder (SMP) continues to make gains, as market sentiment has shifted dramatically over recent weeks.

Freshly produced SMP is now fetching close to €1,850/t on spot markets, which is the highest price level for the commodity since July 2017. The continued clearance of the European Commission’s stocks of intervention SMP has injected some much-needed life into European powder markets.

If the European Commission sells another large volume of SMP out of intervention at this week’s tender sale, it can be expected we will see continued rises in spot prices for fresh SMP to more normalised price levels.

Whole milk powder (WMP) prices are also benefiting from the clearout of intervention stocks.

Spot prices for WMP in Europe have risen a further €50/t in the last week and are trading in the region of €2,750/t to €2,800/t.

On the fats side, there is a similarly positive story, with prices for most commodities kicking off the new year on a positive footing. Butter prices have found some upward momentum, with spot markets trading in the range of €4,300/t and €4,400/t last week. The Dutch Dairy Board reported a butter price of €4,280/t this week. Cheese markets are steady across Europe, with cheddar trading around the €2,900/t mark.

Dairy markets: commodity prices make a positive start to 2019
Spot prices for almost all dairy commodities started the new year on a positive note in Europe.

Dairy markets have kicked off 2019 on a positive note, with European spot prices for most commodities rising in the last week.

On powder markets, the price of skimmed milk powder (SMP) continues to make gains as market sentiment has shifted dramatically over recent weeks.

Highest level since 2017

Freshly produced SMP is now fetching above €1,800/t on spot markets, which is the highest price level for the commodity since July 2017.

The continued clearance of the European Commission’s stocks of intervention SMP has injected some much-needed life into European powder markets.

If the European Commission sells another large volume of SMP out of intervention at this week’s tender sale, it can be expected we will see continued rises in spot prices for fresh SMP to more normalised price levels.

Whole milk powder

Whole milk powder (WMP) prices are also benefiting from the clearout of intervention stocks.

Spot prices for WMP in Europe have risen a further €50/t in the last week and are trading in the region of €2,750/t to €2,800/t.

On the fats side, there is a similarly positive story, with prices for most commodities kicking off the new year on a positive footing.

Momentum

Butter prices have found some upward momentum, with spot markets trading in the range of €4,300/t and €4,400/t last week.

The Dutch Dairy Board reported a butter price of €4,140/t last week, which will be expected to rise for this week.

Cheese markets are steady across Europe, with cheddar trading around the €2,900/t mark.

For the coming months, Europe will set the tone in global dairy markets, depending on the amount of milk produced by the large dairy countries in the EU, including Ireland.

A big spring flush of milk from Europe would test market resolve, although the imminent clearance of the European Commission’s SMP stocks is a major plus for dairy market sentiment in 2019. Time will tell.