UK dairy markets in balance

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DAIRYCO has reported that available supplies, across all dairy products available on the UK market, remains tight, particularly for cream and butter.

However, demand has by no means out-stripped supply. Therefore, quoted prices are based on a small amount of trade in the market and any small change to supply or demand is likely to have a relatively larger impact on price - up or down.

Looking at markets, cream is the one area which has seen some demand with interest beginning to build towards Christmas. Historically, the Christmas period sees two stages with prices increasing up to the week prior to Christmas as customers look to secure supplies. After this, prices often fall as demand falls away into the New Year.

Butter markets have strengthened although they remain well below the equivalent value of cream. Private storage aid stocks are reducing steadily with just under 50,000 tonnes remaining (as of 23 November). There is a suggestion that the EU may see imports from New Zealand in early 2013. However, with PSA stocks falling and a general tightness in terms of supply, this may not have the same effect on prices as was seen in 2011/12.

Powder markets remain balanced with little product available although as with butter, demand is fairly quiet. Moving forward, views are uncertain. There is some suggestion that livestock farmers are coming into the market which may move prices up in the future. Conversely, there has been some easing in European prices although UK-origin product will carry a premium.

Cheese markets remain stable but with some milk buyers selling milk on spot markets as opposed to processing it, cheese stocks may reduce which could result in some upward pressure in the future. Meanwhile, the average prices for dairy rations remained unchanged between October and November. Prices for protein concentrates also remained unchanged between October and November. The average price of high protein concentrates was £376/tonne in November an increase of £33/tonne since November 2011. The price of soymeal decreased between October and November but the price of rapeseed meal increased £12/tonne between October and November, an increase of £102/tonne year on year.

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