Dairy market improving, says quarterly EU report

By Helen Glaberson

- Last updated on GMT

Related tags: Milk, Us

A quarterly report from the European Commission on the dairy market has observed a continued improvement in prices compared to the record low levels in spring 2009, despite a recent dip in EU prices for dairy commodities.

According to the Commission, world prices continue to be at “historically high levels​”, aside from the price spike of 2007.

On the world market, the most competitive prices are to be found in the US for butter, milk powder and cheddar. The report said US prices for butter and cheddar have significantly dropped over the past weeks.

EU prices were the highest for all commodities, except for Skimmed Milk Prices (SMP).

Production levels

Milk production, that was slow during the first few months of 2010 due to poor weather conditions and lower producer prices, has been increasing since spring.

The report said cumulative levels of milk production for the January-September period 2010 are 0.8 per cent higher than in the same period for 2008. This increase in production, in addition to higher demand, has led to more value added products such as yoghurts and cheese.

However, dairy commodities, such as butter, skimmed milk powder and whole milk powder saw a decrease in production levels for the first 9 months of 2010.

Compared to quota levels, first estimates show that milk deliveries from April to September 2010 are 6 per cent below quota for the EU-27,”​ said the report.

US milk production has been increasing steadily month after month for most regions of the country with intake above year ago levels.

However, in NZ and Australia the weather conditions – which proved not as favourable as expected prevented the forecasted surge in milk production.

Both countries predict a total milk production increase of between 1 and 3 per cent for the present season, while future US milk production increase (forecast at 1.8 per cent for 2010 and 1.5 per cent for 2011) may be affected by rising feed costs.

Related topics: Markets

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