The EU market prices continue to erode further in a continuingly lacklustre market place.
The pace by which prices have been coming down seems to be slowing at the moment.
Liquid skimmed concentrates remain very weak but have kept stable since last week at a level of € 1400-€ 1600/t. As long as the problems with production capacity have not been solved, this doesn’t translate 1:1 to commodity prices however. Uncommitted raw milk is reported to be traded below € 0,32/liter – nearly 25% below the average price of the Coops.
A friction remains present in how trade houses view the market and how coops look at it. The latter seem less convinced that prices will fall as much as the trade is anticipating. It looks like most of the hot air is out of pricing for now, but EU is yet to come into their peak production with extra production facilities coming on line.
Yesterday’s GdT seems in sync with EU developments in that the price decreases were less than anticipated prior to the event. The GdT index fell by 2,6% which is significantly less than the forecasted -5% to-10%. This in spite of increased volumes.
The biggest volume commodity on Gdt, WMP only fell by 1,6% which indicates an ongoing good demand on the Global markets. That seems promising for EU exporters, with Oceania going out of season soon but there’s still an important gap to bridge in pricing. Currently Fonterra is still about € 600/t cheaper than EU.
For the 7th time in a row, most official Dutch quotations went down, or remained unchanged;
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.
For the 5th week in a row, the best valorization is Caseinate/Whey/Butter. Caseinate pricing did not follow SMP pricing moving up and now that SMP is going down, Caseinate moves down slower, thus ensuring a better valorization for the time being. Also Butter is holding up well compared to other dairy commodities. On the back of continued weak cheese pricing the Cheese/Whey combination is worst off in terms of valorization which we can’t see changing on the short term with stock building at producers.
WHEY & WHEY DERIVATIVES
Higher WPC’s remain stable at prices around the € 7500/t. WPC35 short in supply. Prices keep getting weaker though, because of lower SMP prices. Lactose stable with more interest at levels around the € 1050/t mark. Permeate in demand and availability improving. Prices however deteriorating to below 70% SWP parity. SWP however stable to slightly improved around the € 900/t mark.
SMP weaker. Skimmed Milk Concentrates continue to be weak with continuing processing capacity restrictions. Lowest prices traded this week below € 1400/t but for regular business slightly more attractive prices are achieved. Current pricing for SMP lies between € 2600 -€2800,-/t depending on origination and/ or final export destination and may erode further, given the huge gap between raw material and end product, once the production capacity has improved. Note that for the very nearby/ prompt delivery, higher prices are achieved.
FCMP slightly weaker again. Prices between € 3400-3550,-/ton depending on origination and/ or final export destination.
SMP for feed continues to decline, also for the nearby term. Last deals were done € 2325/t.
Caseinate pricing seems stable. Availability is rather sufficient within the EU. Caseinate priced today between € 8200-€8850. We have seen a wider gap emerge between different brands. Acid casein stable(ish) at a level of around the € 7750/t and Rennet also stable at levels of € 7600/7700/t.
Nijmegen, 16nd April 2014
Nijmegen, 16th April 2014
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