ADDITIONAL REMARKS MILK PRICES JANUARY 2009

 

MILK PRICE

The average milk price calculated for January 2009 deliveries is € 28.84 per 100 kg standard milk. This is compared with the same month last year € 8.92 lower (minus 23,6%). In comparison to January 2008 the average milk price is € 0.75 lower.

Coming months milk prices will trending further down. Some of the dairies have already announced their new prices.

MARKETSITUATION

Dutch Quotations
  € per 100 kg

1 January 2009 4 April 2009 index trend
Butter 210 216 102,8 ®
Whole milkpowder 195 185 94,8 ®
Skimmed milkpowder 150 164 109,3 ®
Wheypowder 39 38 97,4 ®
Gouda cheese ± 310 ± 295 95,2 ®

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Market comments

In the Netherlands milk output during the two months January and Febrary 2009 was 1.856 billion kgs or appr. 0.4% higher, compared to the same months last year. The average milk fat and protein percentage during this period was 4.53% and 3.54% ,being 0.07% and 0.03% higher to last year.

The milk output figure in the EU-25 for the period January-December 2008 was appr. 0.6% higher than the previous year,but is now trending lower.

Especially in Germany,Ireland,France and United Kingdom.For the super levy period April to December 2008 milk production declined appr. 0.4%. However a small group of countries such as Netherlands,Denmark, Spain and Poland produced more,compared to the last super levy year 2007/2008.

Tumbling market prices and growing uncertainty pressed the European Commission to help markets recently by taking some market support measures. First of all private aid scheme of butter was advanced by 3 months and started from January 1, export subsidies were reintroduced to make export competative again and relieve the internal market and another measure,which could be more effective,was a continuation of the intervention purchases beyond the official limits of 30.000 tons of butter and 109.000 tons of skimmed milkpowder. These quantities will be bought in at full intervention prices, but after that tendering is introduced. Commission wants to keep up a safety net as long as this period of depresssed prices continue.

Against this background the market showed more stabilisation.

EU butter and SMP prices were being supported by the prospect of manufacturing for intervention. Now 37.000 tons of butter and 80.000 tons of skimmed milkpowder have been bought.As prices until lately move below intervention support levels this outlet gives prices a little upward potential up to their respective intervention equivalent value. A further improvement of market prices will only occur until either the supply of product will decline or buyers have confidence that the global economic situation will improve. The outlook for exports has changed drastically with the expectation of global recession in 2009.

Lower consumer demand is slowing import growth everywhere;moreover a weakening dollar will deteriorate the export position from the EU. So the strong growth in total world trade of the last couple of years will probably reverse and latest forecasts point to a fall of 13% for 2009.