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8/8/2019 Dairy Market Report 2nd March 2010
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Dairy Market Report
End February/Early March 2010
8/8/2019 Dairy Market Report 2nd March 2010
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Latest Developments - EU (1)• EU market prices stabilising above intervention (25% above for
butter, 10 to 12% above for SMP) – expected to do so for a fewweeks at least (slight lift in feed SMP in last 2 wks)
• Market tightening
• Intervention: new season opened as of 1st March, but nointervention purchases expected for the short term
• Cold weather + poor prices limiting supplies – France 1 to 2%below a year ago
• SMP export competitive against US product, and strong exportssince October
• Butter uncompetitive still, but gap has narrowed
• US$ strength against weak Euro has helped EU exports
• Cheese output more profitable so could increase again, limitingSMP/butter supplies
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Latest Developments (2)
Concerns:• Stock releases in EU and US causing nervosity
– Concerns over Deprived Persons Scheme andintervention stock handling
• UDF milk auction in NI down 0.73ppl to 23.32ppl (equals to 26.62cpl at current exchange rate)
• Unknowns:– Outcome of Fonterra auction on 2nd March – will
include SMP for first time, in addition to WMP andAMF.
8/8/2019 Dairy Market Report 2nd March 2010
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Branded butter (bulk) EU prices
Early Jan 09 to Late Feb 10
1800
2000
2200
2400
2600
2800
3000
3200
3400
3600
3800
E a r l y
J a n
E a r l y
F e b
E a r l y
M a r
E a r l y
A p r
E a r l y
M a y
E a r l y
J u n
E a r l y
J u l
E a r l y
A u g
E a r l y
S e p t
E a r l y
O c t
E a r l y
N o v
E a r l y
D e c
E a r l y
J a n
E a r l y
F e b
€ / t o n n e
Belgium
Germany
France
Netherlands
Poland
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SMP feed (spray) EU prices
Early Jan 09 to Late Feb 10
1300
1400
1500
1600
1700
1800
1900
2000
2100
2200
2300
E a r l y
J a n
E a r l y
F e b
E a r l y
M a r
E a r l y
A p r
E a r l y
M a y
E a r l y
J u n
E a r l y
J u l
E a r l y
A u g
E a r l y
S e p t
E a r l y
O c t
E a r l y
N o v
E a r l y
D e c
E a r l y
J a n
E a r l y
F e b
€ / t o n n e
Germany
France
Netherlands
Poland
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WMP EU prices
Early Jan 09 to Late Feb 2010
16001800
2000
2200
2400
26002800
3000
3200
3400
3600
E a r l y
J a n
E a r l y
F e b
E a r l y
M a r
E a r l y
A p r
E a r l y
M a y
E a r l y
J u n
E a r l y
J u l
E a r l y
A u g
E a r l y
S e p t
E a r l y
O c t
E a r l y
N o v
E a r l y
D e c
E a r l y
J a n
E a r l y
F e b
€ / t
Germany
France
Netherlands
Poland
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Whey powder (feed spray) EU prices
Early Jan 09 to Late Feb 10
310360
410
460
510
560
610
660
710
E a r l y
J a n
E a r l y
F e b
E a r l y
M a r
E a r l y
A p r
E a r l y
M a y
E a r l y
J u n
E a r l y
J u l
E a r l y
A u g
E a r l y
S e p t
E a r l y
O c t
E a r l y
N o v
E a r l y
D e c
E a r l y
J a n
E a r l y
F e b
€ / t o n n
e
Germany
France
Netherlands
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World market
8/8/2019 Dairy Market Report 2nd March 2010
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World market developments
• Awaiting March 2nd Fonterra tender: first time to include
SMP• Constricting supplies
– NZ milk production 6.2% down on previous year for July-Dec period,though full 12 month expected 4% down
– Oz supplies down 6% in second half of 2009– Product availability from Oceania will be very limited in coming months
– US supplies expected to fall further
– Cold weather restricting supplies all over EU – will delay Spring peak
• Rising demand– International tender for 30,000 to 50,000t of SMP + WMP mix currently
being watched (Algeria??): expected to benefit EU traders most of all –due to short dates for delivery (March-May)
• EU best placed to pick up on export demand over coming
months.
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World prices for New Zealand products
2007 to 2010 todate
1400
1900
2400
2900
3400
3900
4400
4900
5400
2007 2008 2009 2010
Week No.
U S $ / t
Butter SMP WMP Cheddar
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World dairy market prices - Western European products2007 to 2010 todate
400
1400
2400
3400
4400
5400
13579 1 1 1 3 1 5 1 7 1 9 2 1 2 3 2 5 2 7 2 9 3 1 3 3 3 5 3 7 3 9 4 1 4 3 4 5 4 7 4 9 5 113579
1 1 1 3 1 5 1 7 1 9 2 1 2 3 2 5 2 7 2 9 3 1 3 3 3 5 3 7 3 9 4 1 4 3 4 5 4 7 4 9 5 113579
1 1 1 3 1 5 1 7 1 9 2 1 2 3 2 5 2 7 2 9 3 1 3 3 3 5 3 7 3 9 4 1 4 3 4 5 4 7 4 9 5 11357
2007 2008 2009 2010
Week No.
U S $ / t
Butter SMP WMP B'oil Whey Powder
8/8/2019 Dairy Market Report 2nd March 2010
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EU SMP competitive on worldmarket without refunds – butter not
1st March 2010
NZ v. US v.
EU Refund € $ $/€ x rate Ocean. Europ. US EU EU
SMP 1900 0 1900 2600 1.36857 2750 2675 2794 -150 -194
Butter 2850 0 2850 3900 1.36857 3650 3825 3097 250 803
Exch rate w hole month of Feb 2010
1 tonne = 2205 lbs
World pr ice in US$EU Price in €
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U S C
a s e i nr e t ur n s b
a c k t o2
0 0 7 l e
U S c a
s ei nr e t ur n s ( i n
€ / t )
J an 0 4 t o
M ar 1 0
3 0 0 0
4 0 0 0
5 0 0 0
6 0 0 0
7 0 0 0
8 0 0 0
9 0 0 0
1 0 0 0 0
Jan-04
Mar-04
May-04
Jul-04
Sep-04
Nov-04
Jan-05
Mar-05
May-05
Jul-05
Sep-05
Nov-05
Jan-06
Mar-06
May-06
Jul-06
Sep-06
Nov-06
Jan-07
Mar-07May-07
Jul-07
Sep-07
Nov-07
Jan-08
Mar-08
May-08
Jul-08
Sep-08
Nov-08
Jan-09
€/tonne
C a s ei n ai d
A v c a s ei n pr i c e
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Exchange rate make EU productmore competitive
US$ down 8% against
Euro since Nov 09
Current: €1 = $1.368
Stg £ down 4.3% againstEuro since Oct 09
Current: €1 = Stg£ 0.876
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Outlook for Spring?
• Product prices may not dip with seasonal spring
production increase if EU export rise• This is likely in view of low Australasia and US
availability
• Advantage of weak Euro/strong US$/Stg• EU cheese prices now compare favourably and
competitively with US and Oz+NZ
• Demand could strengthen• Commitment on stock holding from new
Commissioner?
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Spring 2010 Milk Prices
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Co-op Collection Jan change Jan price
Drinagh 0.40 1 25.25
Bandon 0.00 1 25.21
Barryroe 0.28 1 24.93
Lissavaird 0.28 1 24.87
Lakeland 0.39 No change 24.48
Arrabawn 0.50 No change 24.08T. of Mon. 0.40 No change 24.00
Newmarket 0.00 No change 24.00
Wexford 0.00 No change 24.00
North Cork 0.00 No change 24.00
Dairygold 0.00 No change 23.77Tipperary (See below) No change 23.76
Glanbia 0.00 No change 23.76
Kerry 0.00 No change 22.81
Con Gold (incl in –C) No change 22.39
Conditional bonuses not included above:
Lakeland: Oct-Mar lactose bonus 0.27+ VAT paid > 88% of suppliers incl.
Glanbia: 1.5c/l lactose-related bonus if June production <16%
Con Gold: 0.44c/l 7-milk cap; 0.3c/l <200k SCC; 0.3c/l <30k TBC
West Cork Co-ops: 0.88c/l <200k SCC for Nov to Feb milk
Dairygold: 0.4c/l <200k SCC
Tipperary: Coll free for capacity for 3 days’ milk; 0.1c/l <200k SCC
Manufacturing Milk Prices—January 2010c/litre , 3.3% p, 3.6%f, ex. VAT, collec, and cond. bonuses
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Milk supplies dipping due to lack of profitability more than bad weather
Milk supplies falling month on month since last April
Down 3% year on year11% below quota at end Jan 10
0
100
200
300
400
500
600
700
800
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
m l i t r
e s 2008
2009
2010
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2c/l price lift needed and justifiedon basis of whole year outlook
• Average Jan milk price: 24c/l• Teagasc estimate for 2010 costs: 23c/l
• To cover costs + pay modest wage: need 28c/l
• 26c/l by March not unreasonable
• 2c/l price increase by March needed to
– Boost confidence
– Reassure bank manager
– Secure milk supplies
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Thank you for your attention!
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