Another quiet week with very little activity on the EU markets, but filled with anticipation.
By and large, and in spite of a much higher milk production, most Cooperatives have held Farm gate prices for milk at the same levels for March as were paid in February. This is in stark contrast to prices paid on the ‘free‘market. Raw milk fetches a price of abt € 0.36/0,37 on the free market compared to Cooperative prices just over € 0,40/kg. Liquid cream is reported to be traded at € 4350/t which seems in line with current Butter prices but Liquid Skimmed Concentrate is reported to be traded between € 2100-€2200/t which is extremely low compared to SMP pricing.
Participants on the Gulfood show came back with a slightly uneasy feeling about the market and were confirmed by yesterday’s GdT results: -4% in average. Based on volume traded in Event 111, this implies an US $ 9.000.000, - loss in value compared to Event 110, or in average; US $ 222/t of product. Of the main commodities, the biggest losses were booked on WMP – 5,7%, SMP – 3,9% and AMF – 3,5%. These three products represent over 75% of all product offered on GDT. Surprisingly, both Butter and Cheddar gained respectively + 3,9% and + 0,7%.
Clearly a much more bearish market has emerged for the months ahead. For the nearby terms the question is if EU can follow these prices in view of the current problems in drying capacity.
Product This week Last week ∆ change Trend off. dutch quotations €/mton
* TMV = Theoretical Milk Valorisation in these product combinations. ** Values are calculated on basis of current salesprices and are including processingcosts but excluding possible revenues out of by- streams of product and/or optimalisations such as milk standardisation.
Butter/SMP still remains the best valorization of these three combinations. However, Caseinate/Butter/Whey running up on the back of slightly better Caseinate & Butter pricing.
WHEY & WHEY DERIVATIVES
Higher WPC’s remain stable at prices around the € 7500/t. WPC35 short in supply. Prices weaker though, because of weaker SMP prices. Lactose slightly better with more buying interest at levels around the € 1050/t mark. Permeate in demand and availability improving. Prices are at >75% SWP parity. SWP now traded at around the € 950/t mark.
SMP weaker. Skimmed Milk Concentrates have eroded further and now trade at about € 2100-2200/t. Current pricing for SMP lies between € 3200 -€3250,-/t depending on origination and/ or final export destination and may erode further given the huge gap between raw material and end product.
FCMP stable to slightly weaker. Prices between € 3575-3750,-/ton depending on origination and/ or final export destination.
SMP for feed remains illiquid and is currently facing a technical movement. Current market today at < € 2740/t.
Caseinate pricing has improved somewhat which is attributed to clearing of stocks and a slightly better demand on the EU market. Availability is sufficient within the EU. Casein and Caseinates remain undervalued which is clearly demonstrated in the TMV indices above. Caseinate priced today between € 8400-€8850. Acid casein weaker at a level of around the € 8000/t and Rennet also weaker at levels below € 8000/t. This group as a whole is under performing compared to SMP equivalent. One might expect a further weakening as likely, a lot of the extra milk produced is being put a much as possible into these products as all other drying capacity seems fully utilized.
Nijmegen, 5th March 2014
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