Milk Prices Falling Across Europe

With European dairy commodity markets showing signs of moderation in June and July, the fall in EU dairy prices has been considerably less than in the previous four months – except for cheese.

According to the most recent data from the USDA, EU-28 commodity prices fell between May and June but stabilised in the first two weeks of July.

Average wholesale prices dropped by 0.5 per cent, 0.8 per cent and 2.2 per cent respectively for butter, SMP and WMP. Cheese prices saw a greater drop, declining by 4.0 per cent on average over the month, according to figures from DairyCo.

Strong export performance for EU butter, SMP and WMP in the first four months of the year on the back of globally competitive prices is helping to minimise the build-up of stocks and providing some support to these markets.

The opposite was the case for cheese, with a drop in export volumes adding pressure to markets, with the Russian market being behind drop in EU cheese exports.

Demand in the EU is reported to have been weakened by the start of the holiday period and the continued strength of milk production.

Further drops in prices can be expected.

Uncertainty surrounding export demand from China and the impact of the political situation with Russia on EU exports are also reported to be keeping markets quiet.

However, globally, whole milk powder prices have fallen from around $5000 per metric tonne to just over $3000 in a year.

Most recently in the UK, following its regular price review, Arla Foods is to reduce its UK headline milk price by 0.94ppl, with effect from 4 August.

The decrease is the result of a 0.98ppl drop in its on-account price and a 0.04ppl increase in its supplementary payment.

This latest reduction is linked to the continued declines in global and European commodity prices.

Dairy Crest announced a 1.1ppl reduction for both its liquid and Davidstow suppliers.

The adjustment will be applied from September and comes as a result of declines in returns from global dairy ingredient markets and robust UK milk production.

While liquid suppliers received a decrease in July, this will be the first price cut for the Davidstow contract in ten months.

These price cuts have been followed by price reductions by First Milk reported at 1.75ppl, Muller Wiseman 1.2ppl and Wyke Farms and Meadow Foods at 1ppl for fresh milk.