Milk markets have continued to gather momentum this week and according to ICMSA Dairy Committee Chairperson, Mr. Gerald Quain, there should be no reason why this momentum should be halted in the coming weeks with positive indicators from global dairy markets. Milk production in Britain, one of the main dairy markets is back 2% in 2018 to the start of May due in no small part to the cold spring and milk production growth has also slowed across Europe and globally.
Milk is no different than any other product with the supply/demand balance determining price and tightening supplies are having an impact. Therefore, it is no surprise to see spot prices in the Dutch Quotations returning over 35cpl after processing and including VAT for the Butter/SMP combination. This is up 7 cents per litre since the start of April and reinforces ICMSA view of a market that is bullish. Similarly, the WMP returns are over 31cpl, up 3cpl in that same period. Butter continues it upward trajectory with UK butter well up on this time last year but more importantly, powders have also risen significantly in the last number of weeks.
The main stumbling block to powder sales which has overhung the markets is the large level of SMP in Intervention. However, the sale of almost 42,000 tonnes of SMP from the latest tender in May provides an indicator of a stronger market and also no purchases of SMP into Intervention. To put it in context, over 76,000 tonnes of SMP have been sold from Intervention in two months or a reduction of over 20% compared to only 10,000 tonnes sold in the previous 18 months and SMP prices are on the increase which is a significant positive.
Concluding, Mr. Quain stated that the milk markets are now moving in a positive direction and this must be reflected in the coming months milk cheques given that there has been such a horrendous time on farms for milk production, feed and fodder costs as well as the on-going mental strain associated with these issues.
Ends 18 May 2018
Gerald Quain, 086-3623041
Chairperson ICMSA Dairy Committee
ICMSA Head Office (061) 314677