The EU markets continue at their traditional low summer activity levels with little change, if any, compared to last week. In absence of any activity to speak of, prices keep eroding further.
A lot has been said through different channels about the alleged buying strike of China but as of the end of June, the statistics seem to speak another language and show that for some products Chinese imports are still accelerating:
China imports ∆ May '14 vs '13 ∆ June '14 vs '13
WMP 70,20% 73,50%
SMP 88,70% 82,90%
WHEY 0,80% 1,20%
CHEESE 125,90% 119,40%
BUTTER 57,40% 58,10%
This in combination with USA and EU exports figures upto May appear to contradict the current bullish market sentiment.
In terms of reliance on Chinese imports, EU export account as follows:
chinese imports upto May EU as a % EU in tonnes as a % of EU exports
WMP 1% 4.869,30 2,70%
SMP 23% 30.193,00 11,90%
Butter 3% 1.395,00 2,65%
Cheese 9% 2.735,91 0,86%
Of course there is the law of communicating vessels implying that a buying strike in such a big importing country as China will eventually spill over to other countries as exporters more reliant on Chinese imports will in absence of buying activity need to look to other markets, thus causing more competition there. Based on ‘hard’ import/export data however there is no reason to doubt the robustness of demand in China and beyond. It is a good thing that Chinese importers keep telling us about high stocks in China as we would never have guessed it.
It will be interesting to see how the 2nd half of the year develops.
The official dutch quotations of this week :
Product This week Last week ∆ change Trend
off. dutch quotations €/mton
Butter 3420 3450 -30 ↓
Whole Milk Powder 2960 3040 -80 ↓
SMP Food 2630 2680 -50 ↓
SMP Feed 2380 2400 -20 ↓
Sweet Whey Powder feed 920 920 0 -
Greenmark indices €/100 liters
TMV* Butter/SMP** 36,52 37,60 -1,08 ↓
TMV* Cas/Whey/Butter** 41,17 41,17 - -
TMV*Cheese/Whey** 40,58 40,57 0,01 ↑
* TMV = Theoretical Milk Valorisation in these product combinations.
** Values are calculated on basis of current salesprices and are including processing costs but excluding revenue out of by streams and/or optimalisations such as milk standardisation.
For the 18th consecutive week, the best valorization is Caseinate/Whey/Butter. Breaking with the trend in the past weeks, we see now again SMP/Butter drifting off again on the back of weak SMP pricing. Cheese is doing remarkable well given the higher production versus lower exports and is now 2nd best in terms of milk valorization.
WHEY & WHEY DERIVATIVES
Higher WPC’s are stable to slightly weaker. WPC80 now traded at levels around the € 7000/t but more often just below that. WPC35 prices are slightly deteriorating because of lower SMP prices in the Feed markets. Permeate in demand and trading at over 70% SWP parity. SWP for feed currently trading at € 925/t and € 950 for Q4. Lactose very weak at prices below € 800/t
SMP for food clearly weaker. Current pricing for SMP lies between € 2500-€ 2750,-/t depending on origination and/ or final export destination. Currently pricing for Feed SMP is € 2340/t for nearby delivery and closer to € 2300/t for Q4 delivery.
FCMP again weaker. Prices between € 2900-3050,-/ton depending on origination and/ or final export destination.
Caseinate pricing seems weaker. Caseinate priced today between € 8200-€9000 but we hear of prices below € 8000/t for Q4 already. Acid casein has firmed over the last weeks and is now trading at € 7500/t and Rennet weaker too at levels of € 7200/7400/t.
Nijmegen, 30th July 2014
This report is updated every wednesday. Should you want to receive the report directly by email, please use the contact form on the 'contact us' page. Back issues available upon request.