5 minute read
MILK ANALYSIS
EU fat and cheese prices stabilise
EU bu er and cheese prices are seemingly holding rm, especially compared with the dire situation on the
GDT. Prices are dropping, but not signi cantly yet.
Traders say bu er is at €6,700-€6,800 per tonne (£5,652-£5,736/t), but the o cial prices as released by the German, Dutch and French dairy boards are signi cantly higher, so these prices are almost certain to dip in the weeks ahead. e bu er price in the
UK is £5,800-£5,900.
Prices are therefore down by about 10% from peak. In contrast, GDT bu er is down more than 25%.
Cream is seemingly remaining strong at €8,250 (£6,959), which equates to £2.80/kg in UK money.
Cheese also looks reassuringly stable, with edam, gouda and mozzarella all about €5,000 (£4,218), with some traders now quoting higher for Q4.
Cheddar prices in the UK are still at £4,900 for mild, but retail volumes are falling fast, according to the latest consumption data. is drop in demand is of considerable concern to manufacturers.
It used to be the case that supply side concerns were at the top of their list of concerns, but not anymore. e impact on demand of rampant in ation and rising interest rates has overtaken it, to dominate sentiment.
True position
Traders say we probably will not know where the true position is for dairy commodities until the holidays are over and the schools return in September.
Until then, the EU and UK markets are somewhat directionless. But as it stands today, the market could be whole lot worse than it is.
Cheddar retail volumes are falling fast, according to the latest consumption data.
Liquid milk consumption falls further
JAccording to the latest Defra stats for the first half of the year, liquid milk consumption totalled just more than 3,000 million litres, which is down 50m litres and 1.7% on last year, therefore continuing the steady decline which has been in play since 2017. Consumption over the last five years averaged 3,126m litres, so the latest figure is down 3.7%.
Cumulative cheese manufacture was 262,000 tonnes so far this year, which is within 1% of last year. Butter manufacture is 116,000t, down 3,000t and 2.7%, while powder manufacture is 52,000t so far this year, also down 3,000t and 5.9%. Yoghurt manufacture is 206,000t so far this year – down 17,000t and 7.6%. Amount of milk used for liquid market in H1 (million litres)
3,600 3,500 3,400 3,300 3,200 3,100 3,000 2,900 2,800 2,700
2013 2014 2015 2016 2017 2018 2019 2020 2021 2022
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Milk prices continue to rise
JThe latest official Defra milk price for June is 42.66ppl at 4.07% fat and 3.32% protein, equating to 41.7p for a 4% fat, 3.3% protein standard litre.
The latest AMPE figure for July is 54.75p, which is down 1.68p on June, and equivalent to a farmgate price of 49p after an allowance for a margin and additional supply chain costs.
MCVE is at 53p, down 1p. After a margin and costs, the farmgate equivalent is 45.67p.
Latest figure
The latest Milk Price Index figure, as calculated by the Ulster Farmers Union, is now 45.14ppl before transport and a processor margin, and about 39.64ppl afterwards. It is the first time the price has dropped below 40p since February.
GDT down for nine out of 10 auctions
JThe GDT index was down by another 5% for the first August auction, the ninth out of the last 10 that has posted a decline.
The platform has lost 15% of its value in just three auctions and more than 20% since its March peak.
The average price has dropped below $4,000 (£3,312) for the first time since October 2021. WMP is at its lowest since February 2021 at $3,900 (£3,229) and SMP, butter and Cheddar are at their lowest since last October.
The GDT butter equates to €4,568 (£3,850). The differential is more than enough to make imports to the UK economic, even with hefty tariffs and shipment costs.
Indeed March saw the first imports of butter from New Zealand for four years, with price equivalent of 37.6p and the difference between it and the average weighted non-aligned price is effectively the biggest on record.
This will inevitably pull down on UK farmgate prices unless the auction’s fortunes reverse, but traders do not expect it to do so anytime soon.
GDT predicted farmgate price vs. UK non-aligned price (ppl)
50
45 GDT Non-aligned
40
35
30
25
20
Jan 2017 Mar May Jul Sep Nov Jan 2018 Mar May Jul Sep Nov Jan 2019 Mar May Jul Sep Nov Jan 2020 Mar May Jul Sep Nov Jan 2021 Mar May Jul Sep Nov Jan 2022 Mar May Jul
100 tonnes imported. There has not been any imported since though, but it is one to watch and Fonterra is known to have boots on the ground looking for opportunities in light of the new trade deal. Those opportunities might be now.
The commodities convert into an approximate UK milk
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