Prices
Milk prices look to be on the rise. Wholesale prices for most, if not all, products are strengthening and the weather has caused a reduction in production both in the UK and Europe. However, the better weather recently is expected to see domestic production start to catch up with last year.
At a global level, the GDT auction saw a strong trade in mid-April, the first rise since the beginning of February (see last month’s article). At the first event in May the average index fell back again by 1.1%, but at the latest event held on 15th May it increased again by 1.9%. It will be interesting to see if the index rises again at the next event to be held on 5th June; the expectation is that it will.
Currently the main driver in the upturn of commodity prices is SMP. EU average SMP prices have seen a week-on-week steady increase since the beginning of April and UK wholesale SMP prices also saw a marginal upturn in April; but the sense from many is that the market is now starting to pick up some real momentum, the next few weeks could be telling. Volumes of SMP sold out of EU Intervention have also gathered pace. At the last tender, held in mid-May, 42,000 tonnes were sold at a minimum price of €1,155 per tonne, some €100 per tonne more than at the previous month’s tenders (although still below the average EU price for feed grade SMP). Over the last two months 66,000 tonnes have been sold out of intervention.
In addition, wholesale butter and cream prices have also made strong gains since the turn of the year. Perhaps a surprise to most though is the performance of Mozzarella, which has seen a 30% increase in the wholesale price since January.
The improvements in the commodity prices looks like stabilising the farmgate milk price, with only a few changes being announced for June. Meadow Foods has announced a 1ppl price rise, whilst Graham’s has cancelled it’s 0.5ppl price cut for May.
New Zealand
The new Labour Party Environment Minister in NZ, David Parker, has made a bit of a stir by announcing plans to set a limit on dairy cow stocking rates in the country, for which dairy farmers would not be compensated. Parker, who is has also been appointed Minister of Economic Development and Minister for Trade and Export growth, has said that ‘in some areas, the number of cows per hectare is higher than the environment can sustain’. However, Simon Bridges, the National Party leader has described the plans as ‘ill thought-out’ and ‘political grandstanding’.