The markets have come to a full stop and with the festive season commencing in just over a week we can say the trading year’s over and won’t pick up traction until mid-January.
It has been a remarkable year on which we will come back in the last report of this year.
Yesterday’s GdT did very little to blow some life into the market sentiments. The GdT index went up by 2,4% mostly on the back of very strong increases in AMF, Butter and to a lesser degree WMP with respectively 10,8%, 10,4% and 1,4%. Even though the trend seems up especially in the case of Butter and AMF, their pricewise closest competitor EU is not priced much higher ( AMF about the same and butter only 10% in a market that’s moving down.) it is not to say that prices will keep going up and in general we would consider the results bearish especially in view of the volumes traded that were reduced from prior forecasts and the ‘China effect’ with regards to deliveries from NZ under the preferential import tariffs.
Bearish especially with respect ,but not restricted to SMP. The average winning price went down to $ 2320/t or down by 3,2% versus the previous GDT event. The most remarkable price achieved was probably Arla’s $ 2115/t FOB for regular SMP which translates to € 1695/t. In other words: this was sold BELOW EU Intervention level.
This week EU published the October export statistics which keep very strong and in the case of Cheese much less weak than we would have expected as a direct impact of Russia’s trade ban
EU Dairy Exports 2014 vs 2013
product year ytd Sept ∆ YoY in % ytd Oct ∆ yoy in %
SMP 2014 477.600 58,00% 528.300 57,00%
2013 301.500 337.100
WMP 2014 299.600 5,00% 331.200 5,00%
2013 284.700 315.700
Butter 2014 90.400 26,00% 100.900 21,00%
2013 73.100 83.100
Cheese 2014 551.400 -6,00% 607.900 -7,00%
2013 586.100 656.600
Whey Powder 2014 382.600 -1,00% 423.200 -2,00%
2013 388.200 431.600
No real surprises here versus expectations with the exception of Cheese. The shortfall in exports to Russia amounted to just under 81.000t compared to 2013 YtD volumes while total Cheese exports only fell by 48.700t. Most of the increases in markets other than Russia were booked in traditional markets such as Saudi Arabia, South Korea, UAE and Japan but there are no signs that entirely new markets were successfully canvassed.
Meanwhile in the USA dairy prices keep coming down fast which will most likely make a good dent in our export volumes next year.
In the 3 months up to yesterday, CME settlement changes were as follows:
Cas/Whey/Butter remains head and shoulders the best valorisation by some distance. Caseins and Caseinates however only form a small fraction of total output SMP/Casein(ates). For the second time in a row the return for Cheese/Whey is better than for SMP/Butter.
There’s not an awful lot that can be said about commodities and ingredients this week. The market is very calm this time of the year and if anything happens it’s a further erosion of prices. Remarkable however is that SMP feed is kept being traded far below intervention levels.
Robert Schorsij 16th December
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