ACCORDING to DairyCo, the seasonal fall in wholesale prices during the period between Christmas and New Year did materialise.
However, available milk supply remains a concern and there are suggestions that this could help prop up prices from further seasonal falls. Milk production has remained weak through November and December and although the seasonal trough has passed, recovery in milk supplies has been sluggish. Reports are suggesting that spot milk is still being traded at prices not normally seen at this time of year.
Cream prices followed the seasonal pattern of rising further above prices reported in November during the early part of December. However once the rush towards Christmas finished, prices fell as expected as demand reduced. What is unclear is how prices will progress into the New Year, will prices ease further or will the lack of available milk supply provide support?
Butter prices eased in December compared with November primarily due to little or no trade being conducted although the market remains tight. Concerns over available milk supply may help to shore up prices going forward.
Powder prices have also eased back with some pessimism expressed during the early part of December. However with milk supply remaining tight, available product has remained in short supply (particularly for UK origin).
Finally, cheese markets have remained stable although provisional information from Defra shows UK cheese production in October 2012 12% down compared with October last year. If the trend continues, it could put pressure on domestic stocks.
UK Milk utilised for liquid stood at 544m litres in October 2012, a decrease of 39m litres (6.8%) compared with the previous year. Year-to-date totals are down by 1.4%, a decrease of 78m litres. Milk for cheese utilisation was 259m litres in October, which was 23m litres (8.1%) down on October last year, with year-to-date utilisation of milk for cheese up by 1.5% to 3,167m litres. Cream utilisation was down by 2.5% on October last year to 21m litres, while yogurt utilisation was down by 17.7% to 20m litres. Butter utilisation in October was up on last year’s figure by 9.7% at 23m litres.
Meanwhile, Fonterra’s January 2nd auction saw average prices by 2.0%, compared to the previous event. Whole Milk Powder averaged $3,199/tonne across all contracts, a 1.6% increase on the last auction. Skimmed Milk Powder prices were up on the previous auction by 4.7% to $3,572/tonne.