ADDITIONAL REMARKS MILK PRICES MARCH 2010

MILK PRICE

The average milk price calculated for March 2010 deliveries is € 27.32 per 100 kg standard milk. Nevertheless, the European milk prices are for the first time this year above the level of last year (+ € 0.74), representing an increase of 2.8%.
March last year milk prices of some European dairies had suffered a big decline compared to tte previous month, while this year milk prices increased or remain stable. Several dairies will increase their prices in upcoming months.

MARKET SITUATION

€ per 100 kg
Dutch Quotations

1 January 2010 May 7 2010 index trend
         
Butter 315 345 109,5
Whole milkpowder 252 290 115,1
Skimmed milkpowder 203 250 123,1
Wheypowder 70 81 115,7 ®
Gouda cheese ± 290 ± 285 93,5

 

Market comments

In the Netherlands milk output during January-March 2010 was 2.86 billion kgs or appr. 2% higher, compared to the same period last year. The average milk fat and protein percentage during this period was 4.55% and 3.54% being unchanged resp. 0.03% higher compared to last year.

During the super levy period April – March milk output was 1.7% higher.

According to recent provisional figures milk output in the EU-27 for the first quarter of 2010 declined and was 1.3% lower than the previous year.

Milkoutput in the April – January period of the quota year was 0.4% less.

Since April prices for dairy commodities have risen fast and are reflecting the tight market situation for the moment. Beneath fundamental factors also market sentiment are moving prices ahead.

Lower supplies at producer level together with a waiting attitude of buyers,covering ther needs at the latest moment has made markets become more price sensative in such a way that a minor decline in output and/or a minor rise in demand could easily cause a strong reaction in price. Nervosity in the market is rising and buyers are now more active.

Moreover the lower euro/dollar exchange rate makes EU export more competative.

In addition milk production season in the Southern Hemisphere has ended with lower supplies than usual. That makes the EU the most important exporter for the coming months.

Also dairy worldmarkets have seen more active buyers and prices were moving higher.

In April’s Fonterra auction - considered as a credible reference point for the international dairy commodity market - prices shoot upwards agressively.

Prices for butterfat as well as skimmed and full m ilkpowder were 21,9%,25,5% and 21% higher than in March.

The latest auction in May however showed a more prudent behaviour from buyers. Prices of milkpowder declined a little and butterfatwas a bit higher.