ADDITIONAL REMARKS MILK PRICES AUGUST 2009

MILK PRICE

The average milk price calculated for August 2009 deliveries is € 26.27 per 100 kg standard milk. This is compared with the same month last year € 9.00 lower (minus 25.5%). In comparison to July 2009 the average milk price is € 0.76 higher. The August milk prices compared to July increased slightly mainly because seasonal adjustments were applied.

MARKET SITUATION

Dutch Quotations € per 100 kg

 

1 January 2009 30 Serptember 2009 index trend
Butter 210 267 127,0
Whole milkpowder 195 228 117,0
Skimmed milkpowder 150 185 123,3
Wheypowder 39 60 153,8
Gouda cheese ± 310 ± 260 83,9

 

Market comments

In the Netherlands milk output during the period January – August 2009 was 7.487 billion kgs or appr. 2.2% higher, compared to the same months last year. The average milk fat and protein percentage during this period was 4.34% and 3.47% ,being unchanged resp. 0.01% higher compared to last year.

The milk output figure in the EU-27 for the period January-July 2009 declined and was appr. 0.08% lower than the previous year,and probably still trending lower. Despite this trend milkoutput in second quarter (April – June) did rise 1.5% compared to same months last year.However this picture is influenced by the German milk strike in the second quarter of 2008.

A general positive sentiment is noticeable. Rising prices for dairy commodities on the international markets have turned the tide on the EU market where a price recovery has started to develop. Especially on the buttermarket prices have risen fast as the availibility of milkfat is very tight for the moment. Moreover cream prices are too attractive to neglect by producers so cream is directly sold in order to realise a better return.

Also milkpowder prices are pushing higher.

Big question is however : will this be the start of an upturn or are buyers anticipating a rebuilding of inventories which were run down when recession fears were being discounted. For a more durable recovery a structural increase of demand is needed and there are no signs yet this will happen any time soon.

However it looks like there is little room for much more upward potential,given the ample intervention supplies availible,so this market reaction could be shortlived. Up to now some 83,000 tons of butter and 282,000 tons of skimmed milkpowder has been removed from the marketplace and is stocked into intervention.These quantities will come back to the market sooner or later.

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 soon improve.