EU dairy markets still in decline

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EU wholesale prices declined again in June, according to AHDB Dairy. The exception was butter, which showed a marginal increase compared to last month.

Generally supply has continued to outstrip demand, keeping pressure on prices.

Milk production in May was higher than last year in some key dairying member states and early reports suggest strong production has continued into June.

Buyers are still reported to be reluctant to commit to longer term deals given the current price uncertainty.

Butter increased by a slim 0.4% to €3,055/tonne, with reports that the butter market has become more balanced in recent weeks. However, negotiations for later in the year are reportedly slow to develop due to differing price expectations between buyers and sellers. Export demand was still relatively light as prices were uncompetitive with Oceania product.

Skimmed Milk Powder (SMP) prices dropped again to €1,815, the lowest price since September 2009 and just €117 above intervention level. There was some trading activity as buyers looked to cover their needs for the third quarter but many are reported to be reluctant to agree deals beyond this in the current market.

Emmental and whey continued their downward price trends, falling 1.5% and 8.5% respectively. The global whey market remained very competitive, adding to the weak market tone.

Meanwhile in the UK butter prices remained at £2,150/t between May and June whilst SMP prices fell 4% to £1,275/t. Mild Cheddar prices remained at £2,350/t between May and June. Whey butter also remained the same but whey powder fell 11%.

Rising milk output levels remain the factor driving the continuing sluggishness within Europe’s dairy markets. Brussels has confirmed that EU milk production increased in the first month without quota and early reports suggest growth is likely to have continued into May and June. April production figures for key dairying member states show a rise of 1.4% compared to last year.