On March 11 the proposal for repayment of over quota super levies in three annual tranches will be voted for in the EU parliament. Bigger dairy countries like France, Germany and Netherlands are opposed to the proposal in its current form. But it is generally expected the proposal will get voted through.
On the back of improved commodity pricing in January and February but stagnating and declining since late February, March farm gate prices are moving up again. RFC increased their guaranteed price to €34/100 kgs milk which is an increase of 8% vs their February price. Fonterra on the other hand seems less convinced by the price improvements in the first two months of the year and decided to keep the forecast farm gate milk price the same as it was, $ 4.70/kg MS.
Yesterday’s GDT was a reflection of the sentiment we have seen emerge in EU since two weeks ago. Whilst the offered volume was down by 20,000t, the most important commodity WMP lost 1% in value while other commodities appreciated which led to an overall increase of the GDT average index price of 1.1%. In total, Fonterra reduced offered volumes during the past 9 events by 25.5% compared to the same events last year or over 100,000 tonnes.
It is a very weak signal that WMP- accounting for over half of the offered volume- declined whilst volumes were strongly down year on year. The event as such saw gains for SMP (volume about 14% of total offered volume) with 5,9%. Butter representing about 7% of offered volume went up by 2.5% and Cheddar good for about 4% of the total volume went up by 10.8%.
EU SMP offered by Arla went down by 5.8%. The Average WMP price now stands at $3240/t or €2911/t which should offer possibilities for EU exporters.
EU is counting down to the end of milk quota – 3 weeks to go – and by the look of it, already now the EU and export markets are seen to take an advance on anticipated growth in milk production. And why not? Some random news clips of this week in EU media:
- •Arla expects to process 2 billion kgs more milk in the next 2-3 years. This is 17% up from 2014 figures.
- •Ireland published that an additional number of 76.000 dairy cows calved during the first two months of 20145 vs 2014. This number represents 6,7% of the total dairy herd.
- •Beef prices are moving up because far less dairy cows are culled
