DairyCo

The start of the 2012/13 milk year has begun in the same vain as the last one ended with further pressure being exerted on markets.  European milk production is continuing to increase seasonally with relatively favourable conditions although the recent wet and cold conditions in Western Europe may hold back deliveries in the short term.

Overall, prices for most manufactured dairy products are easing and in some instances, starting to align themselves with other international offerings.

Butter prices are continuing to slide on the continent as the market struggles with increasing supply.  The spectre of intervention has been hanging over the market although latest quotations are still well above intervention levels.  In addition, stocks of butter being put into PSA stood at almost 47,000 tonnes up to 22 April, 71% higher than the same period in 2011.

Powder markets are also suffering although, as with world markets, not to the same extent as butter markets.  Trade figures show that EU SMP sales topped €1 billion in 2011 on traded volumes, a third higher than in 2010. Around 22% of supplies - approx. 121,000 tonnes - went to just one country: Algeria.  Chinese intake more than doubled from the year before to 26 000t. Southeast Asian markets opened up to European suppliers, with heavier sales to India, Korea and Vietnam. However, there was a notable downturn in exports to Russia. Sales plummeted from a high of 52,900t in 2010 to just 17,600t.

Whey markets in Europe are seeing prices generally trending lower as cheese production is building. Currently, whey powder is generally being absorbed internally, with international sales slow.

European exports of bulk cheese brought in revenues of €2.4bn last year. The higher earnings, up 4.6% on the year before, were driven by steeper prices - 7% more on average. Overall volumes, at 492,700t, were -2% lower than in 2010.  Fifty per cent of bulk cheese went to Russian and US buyers. But while exports to the US increased (+8%), exports to Russia were slightly (-2%) lower than the year before.