According to DairyCo, it would appear the bottom of the market was reached in January as prices in the EU for most products started to show some upward movement towards the end of the month.
The weakening Euro helped make EU dairy products more competitive on the world markets, which supported the upturn in prices.
Butter prices fell at the start of January as domestic demand eased following the holidays while global buyers remained distant from the market. However through the month, the weaker Euro meant EU prices were more competitive and export demand, especially for bulk butter, picked up allowing for average prices to increase. Buyers applying the ‘wait and see’ strategy appear to have begun to venture back into the market.
A similar pattern was seen for EU SMP as the weakening Euro presented more opportunity to be competitive. Prices bounced back through the month away from intervention levels. Production was reported to be moderate over the month as some of the larger EU producing countries cut back on milk production due to the threat of superlevy.
Whey supplies were reported as tight in January due to the reduction in cheese production. This has kept the market fairly stable although demand picked up towards the end of the month, providing some support to prices.
Unlike other commodity products, further pressure has been seen on Emmental prices over the whole month, despite a decrease in production.
Meanwhile the UK butter trade balance saw a substantial improvement in 2014 resulting from the dual effect of export growth and reduced imports.