DAIRY MARKET REPORT
22nd April 2014
SUPPLY UPDATE
• Production growth continues apace in the US (+1.0% for Jan/Mar 14 v 13, but slower
at +0.9% for Mar alone)...
3
4
5
Stocks
• EU APS butter/cheese – Zero
• EU intervention butter/SMP - Zero
• US butter – 80,000t (March 14 – trend up, but
3...
Market developments – China remains crucial
• Chinese demand growth slowing, stocks returning to “healthy” levels
(they we...
Market developments – what about Russia?
• Tension in Ukraine and possible trade sanctions a concern
• Butter and cheese i...
Market developments – EU markets
• Supplies well up
• While cream prices holding up (avg EU around €4,100/t),
butter price...
10
412
360
324
307
375
355
403 399
104 95
0
50
100
150
200
250
300
350
400
450
1/5/2014 2/5/2014 3/5/2014 4/5/2014
EU AVER...
11
360
307
355
399
276.4
286.2 287.8
308.2
0
50
100
150
200
250
300
350
400
450
BUTTER SMP WMP CHEDDAR
Europer100kilos
EU ...
GDT auction results – 15/04/14
12
Total quantity traded:
36,549 tonnes
IDB PPI INDEX
13
Note: a milk price 31.45% above 2010 avg milk price (CSO) would amount to 38.47c/l+VAT
14
RETURNS FROM AVERAGE EU DAIRY COMMODITY PRICES
20TH APRIL 2014
WAS - 30th March 2014
ESTIMATE OF RETURNS FOR REPRESENTA...
15
Returns for Irish
SMP/butter = 42.59c/l
before processing
costs
Milk price
equivalent
37.59c/l + VAT
= 39.47c/l incl
VAT
BUTTER/SMP and equivalent raw
milk value (Germany)
16
17
18
Outlook for milk prices in 2014
• Prices to Feb have either increased or stayed static at high
level in all EU
• Some nega...
Medium term outlook remains
very good
• Undersupplies continue in China – demand
rising, should continue to underpin trade...
New Milk Market Observatory
• Find it here:
http://ec.europa.eu/agriculture/milk-market-observatory/index_en.htm
• Aims to...
of 21

National dairy committee 29th april 2014

Irish Farmers' Association Dairy Market Report
Published on: Mar 3, 2016
Published in: Food      Business      Technology      
Source: www.slideshare.net


Transcripts - National dairy committee 29th april 2014

  • 1. DAIRY MARKET REPORT 22nd April 2014
  • 2. SUPPLY UPDATE • Production growth continues apace in the US (+1.0% for Jan/Mar 14 v 13, but slower at +0.9% for Mar alone), the EU (+4.6% in January) and New Zealand (+6.4 % for the season to Feb, but +11.8% in Feb. Drought in N Island reported to slow down March/April supplies) • Expansion plans by farmers and industry in NZ for next season (whole milk powder investment) • Production has rallied in Oz: while season is down 1.4% to Mar, increases since Dec, and Mar was +3.7%. • Floods in Argentina have affected main dairy regions badly. • EU: supplies were rising fast in January, in Germany (+4%), France (+3.5%), the UK (11.4% for Jan, and unconfirmed 12.1% up for March - NB, UK still expected to finish the 13/14 year 10% under quota), The Netherland (+5.1%), Poland (+7.3%) • Wet weather slowed Irish growth: Jan + 2.2%, but Feb - 4.4% • UK supplies are rising so fast that they are currently exceeding processing capacity availability -> some distress milk sloshing about (some coming into NI??). “Spot” milk prices of 26-28ppl (31.6-34cpl) or less mentioned against “going rate” of around 33-34ppl (40-41.3 cpl)
  • 3. 3
  • 4. 4
  • 5. 5
  • 6. Stocks • EU APS butter/cheese – Zero • EU intervention butter/SMP - Zero • US butter – 80,000t (March 14 – trend up, but 30% less than same time 2013) • US SMP – 67,000t (Jan 14 – trend up, but 25% less than same time 2013) • No info on private stocks, but buyers tend to operate JIT as much as possible, so private stocks likely low. • Chinese stocks reported “healthier” – i.e. less depleted, which has slowed demand. 6
  • 7. Market developments – China remains crucial • Chinese demand growth slowing, stocks returning to “healthy” levels (they were bare till now) • NZ tariff free quota filled up by April • Chinese domestic supplies ramping up with spring – but still behind demand, and likely to remain so for some time • Forecast demand growth of 8.2% p.a. 2012 to 2017 (increasing consumption, better distribution networks arising from increasing urbanisation), forecast supply growth 1.2% p.a. same period. • 900,000t of shortfall in domestic supplies -> needs to be made up for by imports, and this is expected to firm up prices in the medium term. • Forecast from traders: consolidation of global prices around current levels, possible rebound in market coming up to 2015 because of continued Chinese demand (due to domestic shortfalls). 7
  • 8. Market developments – what about Russia? • Tension in Ukraine and possible trade sanctions a concern • Butter and cheese imports from Russia very important for EU market balance. Massive imports and increases continue (see below). 8
  • 9. Market developments – EU markets • Supplies well up • While cream prices holding up (avg EU around €4,100/t), butter prices have eased (F and D butter around €3,550/t, Dutch price slightly higher, Irish butter price around €3,300) • SMP was more stable at around €3,100, but now easing to around €3,000. • Whey prices average around €950, with some lower reports (€900/t) • Cheese markets are remaining firmer. Cheddar cheese markets in the UK are reported firm, with mild around £3,150/t and mature, depending on origin, up to £500/t above that. 9
  • 10. 10 412 360 324 307 375 355 403 399 104 95 0 50 100 150 200 250 300 350 400 450 1/5/2014 2/5/2014 3/5/2014 4/5/2014 EU AVERAGE DAIRY COMMODITY PRICES JANUARY 2014 TO 20/04/201 BUTTER SMP WMP CHEDDAR WHEYPOWDER
  • 11. 11 360 307 355 399 276.4 286.2 287.8 308.2 0 50 100 150 200 250 300 350 400 450 BUTTER SMP WMP CHEDDAR Europer100kilos EU V GDT DAIRY PRICES - MID APRIL 2014 EU avg 20/04/2014 GDT 15/04/14
  • 12. GDT auction results – 15/04/14 12 Total quantity traded: 36,549 tonnes
  • 13. IDB PPI INDEX 13 Note: a milk price 31.45% above 2010 avg milk price (CSO) would amount to 38.47c/l+VAT
  • 14. 14 RETURNS FROM AVERAGE EU DAIRY COMMODITY PRICES 20TH APRIL 2014 WAS - 30th March 2014 ESTIMATE OF RETURNS FOR REPRESENTATIVE IRISH PRODUCT MIX Calculations 04/04/14 Avg EU mkt price at 30/03/14 - €/t c/l equiv Estimated coeff. BUTTER 3650 SMP 3180 44.77 35% 15.67 CHEESE 4000 WHEY PWDR 990 47.11 41% 19.32 WMP 3640 45.15 8% 3.61 OTHER* 38.05 16% 6.09 44.69 ASSUMING THAT "OTHER" RETURNS 15% LESS THAN SMP/BUTTER NOW - 20th April 2014 ESTIMATE OF RETURNS FOR REPRESENTATIVE IRISH PRODUCT MIX Calculations 24/04/14 Avg EU mkt price at 20/04/14 - €/t c/l equiv Estimated coeff. BUTTER 3600 SMP 3070 43.56 35% 15.25 CHEESE 3990 WHEY PWDR 950 46.76 41% 19.17 WMP 3550 44.03 8% 3.52 OTHER* 37.03 16% 5.92 43.86 ASSUMING THAT "OTHER" RETURNS 15% LESS THAN SMP/BUTTER
  • 15. 15 Returns for Irish SMP/butter = 42.59c/l before processing costs Milk price equivalent 37.59c/l + VAT = 39.47c/l incl VAT
  • 16. BUTTER/SMP and equivalent raw milk value (Germany) 16
  • 17. 17
  • 18. 18
  • 19. Outlook for milk prices in 2014 • Prices to Feb have either increased or stayed static at high level in all EU • Some negative price signals in Lithuania, Estonia • Friesland Campina guaranteed price is to fall by 0.5c/kg from March • UK -> main retailers with producer contracts have increased prices, but all eyes are on Arla price • Irish prices: current levels comfortably sustainable at current market returns (mid-late April) • Some easing likely thereafter. Extent? Timing? • IFA pushing for peak milk to collect strong milk prices. 19
  • 20. Medium term outlook remains very good • Undersupplies continue in China – demand rising, should continue to underpin trade and prices • Uncertainty re. Russia – but if no trade sanction and/or other crisis related to Ukraine -> imports continuing to rise • Strong growth in Irish butter sales in UK, Germany, Russia and USA • Powder prices also remaining relatively strong (though easier) 20
  • 21. New Milk Market Observatory • Find it here: http://ec.europa.eu/agriculture/milk-market-observatory/index_en.htm • Aims to provide EU Commission and operators with uptodate facts and figures to help with prompt decision making (especially re. market management measures). • Same data as was available before, for the moment, but updated more frequently (not for everything) • Work in progress, more info will be added. 21

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