European wholesale markets for dairy products fell further in April as milk production increased seasonally, according to DairyCo.
Official data on March milk production in the EU is not yet available and views coming out of the recent Milk Market Observatory meeting (29 April) were mixed. This is adding uncertainty on how milk production will react to the removal of quotas, although buyers appear to expect strong levels of production. This is keeping them from buying now in anticipation of lower prices in the coming weeks and months.
The Euro strengthened against the US dollar in the last two weeks of the month, adding further downward pressure to prices. A weaker New Zealand dollar is also impacting on the competitiveness of EU product on export markets.
EU butter and SMP prices fell weekly through April as supplies become more readily available. Although there were increased volumes of SMP and butter put into Private Storage Aid (PSA), the lack of buyers pushed prices down.
Whey prices dropped over the month while Emmental prices have remained relatively stable. Reduced production and well balanced stocks have offset any pressure on cheese prices from reduced demand.
Meanwhile, the latest Global Dairy Trade (GDT) auction fell for the fourth consecutive time, down 3.5% compared to the 15 April auction. SMP and AMF prices were the main contributors to the overall decrease, falling 7.5% and 6.3% respectively. Quantities offered of these commodities were higher than forecasted levels and in a market where buyers are few and far between it added further pressure to prices. How long prices will remain under pressure remains dependant on how global production fairs.