o The 3rd meeting of the Milk Market Observatory economic board took place on 24 September 2014,
with the participation of experts from the member
organisations representing the various steps in the
milk supply chain: CEJA (young farmers), COPA-COGECA (producers and cooperatives), ECVC (Via
Campesina), EMB (European Milk Board), EDA
(dairy industry), Eucolait (dairy trade) and
Eurocommerce (retail).
o The meeting was opened with 2 presentations by DG AGRI on the milk market situation and on the
short term outlook. The major part of the meeting
was dedicated to the assessment of the market
situation and perspectives with a special focus on the Russian import ban and its impact on dairy
products.
o Downward pressure on prices registered since
early 2014 has been exacerbated by the introduction of the Russian ban (SMP -18.5%;
butter -9%; WMP -15%; Cheddar –8% and Edam -
3%). Negotiations between processors and
retailers are going on in some MS and downward price pressure is mounting. In some MS the
production of cheese for Russia has stopped and
been converted into SMP and butter. Product
prices seem to bottom out at the moment.
o Farmers are not facing yet a severe drop in milk price, except in some MS. It can take up to three
months like in France before milk prices adapt to
market conditions for dairy products. Forage
quality and quantity for the coming period are good. Feed prices are on a downward trend.
Therefore, farmers may not reduce milk production
before the very end of the year when all farmers
might experience price drops. In MS where production is over quota, a slowdown in milk
production could occur earlier in order for farmers
to limit their surplus levy bill. In some MS, farmers
have invested heavily and could face cash flow
difficulties. Only once facing these difficulties farmers may cull cows to recover some cash
facilities.
o In the draft short-term outlook prepared by the
Commission1, EU milk collection is nevertheless
1
Publication foreseen the second week of October
expected to show less pronounced growth
percentages in the 2nd half of the year, compared to the same period last year where significant
increases were registered. Some experts found the
assumptions (and results) of the short-term
outlook rather optimistic due to the time lag in
price transmission to farmers in some important
milk producing MS.
Consumption forecasts may seem inflated as they
include stock variation. However given the 2014
increase in milk collection and the difficulties met on the exporting markets, more products are
expected to remain on the domestic market
(whether in the form of increased stocks or
consumption). Re-directing products, notably cheese, and finding new customers cannot happen
from one day to the next.
The assessment of EU stock levels based on a
residual approach (production + imports –
consumption and exports) showed that in July 2014 all dairy commodity stocks appeared rather
high because of high production. Stock levels for
SMP and cheese appear to be comparable to that
of the summer 2012. In 2012, stocks reduced rapidly afterwards in the wake of the US drought.
Unlike SMP, butter stocks are assessed as being at
less worrying levels. Cheese stocks are expected to
get healthier given reduced cheese production in a
number of MS.
Oversupply in key producing regions of the world persists. As prices are on a downward trend,
buyers are holding off purchasing decisions as long as possible, depending on their stock position. For
the longer term, global exports are likely to
increase again, in line with demand.
o The market review showed the need to make sure
that market signals reach all actors in the milk supply chain, especially in today's oversupply
situation. Coming from high levels, prices have
been under pressure due to difficulties for the
market to absorb increased production in the major milk producing regions of the world and this
has been exacerbated by the Russian import ban.
This downward trend could continue if production
does not slow down. The uptake of the measures taken remains limited so far (with the exception of
PSA for cheese).
– -
Last update : 29.09.2014
Milk Market Observatory REP.Meb
MMO Economic Board
Meeting of 24 September 2014
ANNEX 1
Milk Market Situation
European Commission
Milk Market Situation
Brussels, 24 September 2014
24 September 2014 2
!!! Data from some Member States are confidential and are NOT included in this table !!!
EU Productions
Total Butter+ 2,9%
Skimmed-milk powder+ 20,0%
Milk powder cream, Whole milk powder
and partly skimmed milk
powder+ 13,9%
Cheese+ 2,3%
Fermented milk- 2,4%
Cows' Milk Collected
+ 5,8%
- 10% - 5% + 0% + 5% + 10% + 15% + 20% + 25% + 30%
Evo
luti
on
in
%
EU-28 Deliveries/Productions development (Jan - Jul 2014 compared to Jan - Jul 2013)
Source : MS' Communications to Eurostat
Rem : FR 2013-14 data not considered (except Milk)DK 2014.Apr>Jul data estimated (except Mi lk)
Total Butter+ 2,4%
Skimmed-milk powder+ 21,7%
Milk powder cream, Whole milk powder
and partly skimmed milk
powder+ 7,0%
Cheese+ 1,8%
Fermented milk- 2,7%
Cows' Milk Collected
+ 5,8%
- 10% - 5% + 0% + 5% + 10% + 15% + 20% + 25% + 30%
Evo
luti
on
in
%
EU-28 Deliveries/Productions development
(Apr 2014 - Jul 2014 compared to Apr 2013 - Jul 2013)
Source : MS' Communications to EurostatRem : FR 2013-14 data not considered (except Milk)
DK 2014.Apr>Jul data estimated (except Mi lk)
Following a data update, the figures shown in this chart differ from those presented in the MMO economic board meeting held on 24/09/2014
24 September 2014 3
-16% to -12%
-12% to -08%
-08% to -04%
-04% to +00%
+00% to +04%
+04% to +08%
+08% to +12%
+12% to +16%
n/a+7,9
+3,3
-0,5
+3,3
+4,4
+8,9
+7,1
-4,8+6,9
+7,4
+3,2
+9,4
+12,4
+8,5
+5,9
+5,4
+3,4
+4,1
+7,5
+4,1
+14,9+2,3
+1,1
+3,4
+2,9
+10,2
Source : MS' Communications to Eurostat
+5,1
Following a data update, the figures shown in this chart differ from those presented in the MMO economic board meeting held on 24/09/2014
24 September 2014 4
-20% to -15%
-15% to -10%
-10% to -05%
-05% to +00%
+00% to +03%
+03% to +07%
+07% to +09%
+09% to +20%
n/a+7,6
+5,9
+0,7
+2,8
+4,3
+8,8
+9,2
-4,6+7,6
+7,1
+3,6
+12,3
+12,5
+9,6
+6,8
+8,4
+2,6
+3,3
+7,6
+4,7
+16,2+3,3
+2,1
+3,1
+2,5
+8,8
Source : MS' Communications to Eurostat
+8,0
Following a data update, the figures shown in this chart differ from those presented in the MMO economic board meeting held on 24/09/2014
24 September 2014 5 Source: MS’ communications to Eurostat
10000
11000
12000
13000
14000
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
10
00
To
nn
es
EU - Cows' milk collected ( 30d ajusted months )
2014
2013
2012
2011
Last Update : Jan-Jul
Jan-Jul 2014/13 : +5,8%
Source : Estat - Newcronos
Following a data update, the figures shown in this chart differ from those presented in the MMO economic board meeting held on 24/09/2014
6
20
22
24
26
28
30
32
34
36
38
40
42
44
46
48
50
Jan 0
1
Jan 0
2
Jan 0
3
Jan 0
4
Jan 0
5
Jan 0
6
Jan 0
7
Jan 0
8
Jan 0
9
Jan 1
0
Jan 1
1
Jan 1
2
Jan 1
3
Jan 1
4
EUR/100 kgEU Raw Milk Prices Evolution (up to July 14)
Weighted EU Average (real fat content)
EU Milk Equivalent Price (based on EU SMP and Butter prices)
Milk Prices (LTO)
Source :MS’ communications under reg. 562/2005 & 479/2010 + LTO : Land- en Tuinbouworganisatie Nederland (http://www.milkprices.nl/)24 September 2014
24 September 2014 7
Source: MS’ communications under Reg. 479//2010
NB: The above national price averages are of mixed nature, some relate to standardised milk, others to milk with real fat and protein
content, pending harmonisation under reg. 479/2010
54,6
47,3
46,9
42,4
41,7
41,2
39,5
38,9
38,2
37,9
37,3
37,2
37,1
36,9
36,5
35,3
35,1
34,3
34,1
34,0
33,9
33,3
33,2
32,4
32,3
32,0
29,3
28,9
26,1
0
5
10
15
20
25
30
35
40
45
50
55
60
CY FI MT EL DK IT NL UK AT SE EU DE FR LU ES IE BE SI HR CZ BG PT SK HU EE PL LV RO LT
in E
UR
/1
00
kg
E U M I L K P R I C E S
Milk Price 2013
Milk Price 2014
Source : Member States (Reg. 479/2010)
( Jul 2014 vs Jul 2013 )
Estimates for DK, IT, SE
24 September 2014 8 Source: MS’ communications under Regs. 562/2005 and 479/2010
150
200
250
300
350
400
450
Jan
Feb
Mar
Apr
May
Jun
Jul
Aug
Sep
Oct
Nov
Dec
EU
R/1
00 k
g
Weekly EU SMP Prices
2011 2012 2013
Latest price : 221 EUR/100kg
Evolution compared to same period last year : -32%
24 September 2014 9
Source: MS’ communications under reg. 479/2010
270265
248
240
225221 219
213 212
150
170
190
210
230
250
270
290
310
330
350
GB CZ IE SK PL EU Avg. BE LV DE
in E
UR/1
00 kg
EU S.M.P. Prices (up to 14.09.2014)
I.P
Source : Reg. (EC) No 479/2010 Article 2
24 September 2014 10 Source: MS’ communications under Regs. 562/2005 and 479/2010
150
200
250
300
350
400
450
Jan
Feb
Mar
Apr
May
Jun
Jul
Aug
Sep
Oct
Nov
Dec
EU
R/1
00 k
g
Weekly EU BUTTER Prices
2011 2012 2013
Evolution compared to same period last year : -26%
Latest price : 311 EUR/100kg
24 September 2014 11 Source: MS’ communications under reg. 479/2010
431
374
355345
334 330319
311 309301 298
290
150
200
250
300
350
400
450
SK LV GB PT ES CZ IE EU Avg. DE BE PL NL
EUR/1
00 kg
EU Butter Prices (up to 14.09.2014)
Source : Reg. (EC) No 479/2010 Article 2
I.P. = 221.75
24 September 2014 12
311
221
140
160
180
200
220
240
260
280
300
320
340
360
380
400
420
440
Jan 03 Jan 04 Jan 05 Jan 06 Jan 07 Jan 08 Jan 09 Jan 10 Jan 11 Jan 12 Jan 13 Jan 14
in E
UR/1
00 k
g
.
EU Quotations of Butter and SMP(EU average based on MS communication and weighted by production)
Butter Intervention buying in price
SMP Intervention buying in price
BUTTER prices
SMP prices
Source: MS’ communications under reg. 562/2005 and 479/2010
24 September 2014 13
140
160
180
200
220
240
260
280
300
320
340
360
380
400
420
440
Jan 0
3
Jan 0
4
Jan 0
5
Jan 0
6
Jan 0
7
Jan 0
8
Jan 0
9
Jan 1
0
Jan 1
1
Jan 1
2
Jan 1
3
Jan 1
4
in E
UR/1
00 k
g
EU Dairy Quotations
(EU Average Prices based on MS communication and weighted by production)
BUTTER
SMP
WMP
CHEDDAR
Source: MS’ communications under reg. 562/2005 and 479/2010
24 September 2014 14 Source: MS’ communications under Regs. 562/2005 and 479/2010
150
200
250
300
350
400
450
Jan
Feb
Mar
Apr
May
Jun
Jul
Aug
Sep
Oct
Nov
Dec
EU
R/1
00 k
g
Weekly EU WMP Prices
2011 2012 2013 2014
Evolution compared to same period last year : -31%
Latest price : 259 EUR/100kg
24 September 2014 15
Source: MS’ communications under Regs. 562/2005 and 479/2010
150
200
250
300
350
400
450
500
Jan
Feb
Mar
Apr
May
Jun
Jul
Aug
Sep
Oct
Nov
Dec
EU
R/100 k
g
Weekly EU CHEDDAR Prices
2011 2012 2013 2014
Evolution compared to same period last year : -9%
Latest price : 354 EUR/100kg
150
200
250
300
350
400
450
500
Jan
Feb
Mar
Apr
May
Jun
Jul
Aug
Sep
Oct
Nov
Dec
EU
R/100 k
g
Weekly EU EDAM Prices
2011 2012 2.013 2.014
Evolution compared to same period last year : -9%
Latest price : 323 EUR/100kg
24 September 2014 16
Source: MS’ communications under Regs. 562/2005 and 479/2010
70
75
80
85
90
95
100
105
110
115
120Ja
n
Feb
Mar
Apr
May
Jun
Jul
Aug
Sep
Oct
Nov
Dec
EU
R/1
00 k
g
Weekly EU WheyPowder Prices
2011 2012 2013 2014
Evolution compared to same period last year : -12%
Latest price : 91 EUR/100kg
24 September 2014 17
USD/EUR
Source: European Central Bank
US Dollar
1.2845
24 September 2014 18
2.8132.9112.980
1.000
1.500
2.000
2.500
3.000
3.500
4.000
4.500
5.000
5.500
6.000
Jun
07
Sep
07
Dec
07
Ma
r 08
Jun
08
Sep
08
Dec
08
Ma
r 09
Jun
09
Sep
09
Dec
09
Ma
r 10
Jun
10
Sep
10
Dec
10
Ma
r 11
Jun
11
Sep
11
Dec
11
Ma
r 12
Jun
12
Sep
12
Dec
12
Ma
r 13
Jun
13
Sep
13
Dec
13
Ma
r 14
Jun
14
Sep
14
Pric
es in
US
D/t
onne
EU/US/Oceania Quotations of SMP
Avg Oceania SMP quotation
Avg EU SMP internal Price
Avg US SMP quotation
Source: MS’ communications under regs. 562/2005 and 479/2010 & USDA market news
24 September 2014 19
2.850
3.390
4.320
1.000
1.500
2.000
2.500
3.000
3.500
4.000
4.500
5.000
5.500
6.000
Jun
07
Sep
07
Dec
07
Ma
r 08
Jun
08
Sep
08
Dec
08
Ma
r 09
Jun
09
Sep
09
Dec
09
Ma
r 10
Jun
10
Sep
10
Dec
10
Ma
r 11
Jun
11
Sep
11
Dec
11
Ma
r 12
Jun
12
Sep
12
Dec
12
Ma
r 13
Jun
13
Sep
13
Dec
13
Ma
r 14
Jun
14
Sep
14
Pric
es in
US
D/t
onne
EU/US/Oceania Quotations of WMP
Avg Oceania WMP quotation
Avg EU WMP internal Price
Avg US WMP quotation
Source: MS’ communications under regs. 562/2005 and 479/2010 & USDA market news
24 September 2014 20
2.975
4.050
6.660
1.000
1.500
2.000
2.500
3.000
3.500
4.000
4.500
5.000
5.500
6.000
6.500
7.000
Jun
07
Sep
07
Dec
07
Ma
r 08
Jun
08
Sep
08
Dec
08
Ma
r 09
Jun
09
Sep
09
Dec
09
Ma
r 10
Jun
10
Sep
10
Dec
10
Ma
r 11
Jun
11
Sep
11
Dec
11
Ma
r 12
Jun
12
Sep
12
Dec
12
Ma
r 13
Jun
13
Sep
13
Dec
13
Ma
r 14
Jun
14
Sep
14
Pric
es in
US
D/t
onne
EU/US/Oceania Quotations of Butter
Avg Oceania Butter quotation
Avg EU Butter internal Price
Avg US Butter quotation
Source: MS’ communications under regs. 562/2005 and 479/2010 & USDA market news
24 September 2014 21
3.950
4.743
5.310
1.000
1.500
2.000
2.500
3.000
3.500
4.000
4.500
5.000
5.500
6.000
Jun
07
Sep
07
Dec
07
Ma
r 08
Jun
08
Sep
08
Dec
08
Ma
r 09
Jun
09
Sep
09
Dec
09
Ma
r 10
Jun
10
Sep
10
Dec
10
Ma
r 11
Jun
11
Sep
11
Dec
11
Ma
r 12
Jun
12
Sep
12
Dec
12
Ma
r 13
Jun
13
Sep
13
Dec
13
Ma
r 14
Jun
14
Sep
14
Pric
es in
US
D/t
onne
EU/US/Oceania Quotations of Cheddar
Avg OceaniaCheddar quotation
Avg EU Cheddar internal Price
Avg US Cheddar quotation
Source: MS’ communications under regs. 562/2005 and 479/2010 & USDA market news
24 September 2014 22
72 86992 258
266 731
303 176
25 293 24 212
42 06857 283
8 659 7 323
0
50 000
100 000
150 000
200 000
250 000
300 000
350 000
2013 2014
BUTTER & Butteroil Exports
EU-28 (up to Jul)New Zealand (up to Jul)Australia (up to Jul)United States (up to Jul)Argentina (up to Jul)
24 September 2014 23
239 274
382 497
225 113
202 422
63 651 .
91 458 .
317 553 .
360 434 .
9 009 10 820
0
50 000
100 000
150 000
200 000
250 000
300 000
350 000
400 000
450 000
2013 2014
SMP ExportsEU-28 (up to Jul)
New Zealand (up to Jul)
Australia (up to Jul)
United States (up to Jul)
Argentina (up to Jul)
24 September 2014 24
216
897
245
635
706 039 .
843 634 .47
718
48 6
86
18 0
73
36 2
02
84 2
01
81 9
06
0
100 000
200 000
300 000
400 000
500 000
600 000
700 000
800 000
900 000
2013 2014
WMP ExportsEU-28 (up to Jul)
New Zealand (up to Jul)
Australia (up to Jul)
United States (up to Jul)
Argentina (up to Jul)
24 September 2014 25
452 931 453 472
172 296158 690
98 9
65
87 8
67
176 830
232 039
27 730 28 050
0
50 000
100 000
150 000
200 000
250 000
300 000
350 000
400 000
450 000
500 000
2013 2014
CHEESE Exports
EU-28 (up to Jul)New Zealand (up to Jul)Australia (up to Jul)United States (up to Jul)Argentina (up to Jul)
24 September 2014 26
EU-28 Exports (1/2) Source : Eurostat (COMEXT)
0
20
40
60
80
100
120
140
160
180
2007 2008 2009 2010 2011 2012 2013
164
118 119126
94102 102
1000 Tonnes
BUTTER exports
0
2
4
6
8
10
12
14
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
1000 tonnes
Jan-Jul 2014 exports compared to 2013 : + 28%
BUTTER exports
2013
2014
0
100
200
300
400
500
600
2007 2008 2009 2010 2011 2012 2013
200176
229
376
515 520
407
1000 TonnesSMP exports
0
10
20
30
40
50
60
70
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
1000 tonnes
Jan-Jul 2014 exports compared to 2013 : + 60%
SMP exports
2013
2014
24 September 2014 27
EU-28 Exports (2/2)
0
100
200
300
400
500
600
700
800
2007 2008 2009 2010 2011 2012 2013
589547 569
667 673
768 787
1000 Tonnes
CHEESE exports
0
100
200
300
400
500
2007 2008 2009 2010 2011 2012 2013
366
483458 445
388 386 374
1000 TonnesWMP exports
54
56
58
60
62
64
66
68
70
72
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
1000 tonnes
Jan-Jul 2014 exports compared to 2013 : + 0%
CHEESE exports
20132014
0
5
10
15
20
25
30
35
40
45
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
1000 tonnes
Jan-Jul 2014 exports compared to 2013 : + 13%
WMP exports
2013
2014
24 September 2014 28
28 847
37 323
9 8847 524
32 124
41 225
27 722
60 499
28 663
10 917
0
10 000
20 000
30 000
40 000
50 000
60 000
70 000
2013 2014
BUTTER + Butteroil
Imports
EU-28 (up to Jul)
United States (up to Jul)
Russia (up to Apr)
China (up to Jul)
Mexico (up to Jun)
24 September 2014 29
2 658578
100 701 100 933
7 510 7 137
103 914
174 670
20 786 23 134
0
20 000
40 000
60 000
80 000
100 000
120 000
140 000
160 000
180 000
200 000
2013 2014
SMP ImportsEU-28 (up to Jul)
Mexico (up to Jun)
Russia (up to Apr)
China (up to Jul)
Japan (up to Jul)
24 September 2014 30
2 318 183549 3 350
340 189
569 743
5 326 3 2717 632 2 904
0
100 000
200 000
300 000
400 000
500 000
600 000
2013 2014
WMP ImportsEU-28 (up to Jul)
Russia (up to Apr)
China (up to Jul)
United States (up to Jul)
Mexico (up to Jun)
24 September 2014 31
43 590 50 091
79 57681 857
101 229
95 983
26 972
42 061
138 721131 964
0
20 000
40 000
60 000
80 000
100 000
120 000
140 000
160 000
2013 2014
CHEESE Imports
EU-28 (up to Jul)
United States (up to Jul)
Russia (up to Apr)
China (up to Jul)
Japan (up to Jul)
24 September 2014 32
Main Dairy Importers (Butter + Butteroil 1/2)
0
25
50
75
100
125
2007 2008 2009 2010 2011 2012 2013
73 80
5472 73 68
90
1000 Tonnes
Russia
0
2
4
6
8
10
12
14
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
1000 tonnes
Jan-Apr 2014 compared to 2013 : + 28%
20132014
0
25
50
75
100
125
2007 2008 2009 2010 2011 2012 2013
14 1328 23
3648 52
1000 Tonnes
China
0
2
4
6
8
10
12
14
16
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
1000 tonnes
Jan-Jul 2014 compared to 2013 : + 118%
2013
2011
2014
24 September 2014 33
Main Dairy Importers (Butter + Butteroil 2/2)
0
25
50
75
100
125
2007 2008 2009 2010 2011 2012 2013
3355 56 52 45 52
1000 Tonnes
Iran
0
25
50
75
100
125
2007 2008 2009 2010 2011 2012 2013
5941
6040
29 3040
1000 Tonnes
Mexico
0
1
2
3
4
5
6
7
8
9
10
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
1000 tonnesJan-Jul 2014 compared to 2013 : + 3%
2013
2014
Jan-Jul 2014 compared to 2013 : + 3%
0
1
2
3
4
5
6
7
8
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
1000 tonnes
Jan-Jun 2014 compared to 2013 : - 62%
2013
2014
2014
Jan-Jun 2014 compared to 2013 : - 62%
24 September 2014 34
Main Dairy Importers (S.M.P. - 1/2)
0
50
100
150
200
250
2007 2008 2009 2010 2011 2012 2013
40 5570
89130
168
235
1000 Tonnes
China
0
5
10
15
20
25
30
35
40
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
1000 tonnes
Jan-Jul 2014 compared to 2013 : + 68%
20132014
0
50
100
150
200
250
2007 2008 2009 2010 2011 2012 2013
121152 165 155
194236
198
1000 Tonnes
Mexico
0
5
10
15
20
25
30
35
40
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
1000 tonnes
Jan-Jun 2014 compared to 2013 : + 0%
2013
2014
Jan-Jun 2014 compared to 2013 : + 0%
24 September 2014 35
Main Dairy Importers (S.M.P. – 2/2)
0
50
100
150
200
250
2007 2008 2009 2010 2011 2012 2013
91 105 93 98129
112 120
1000 Tonnes
Algeria
0
25
50
75
100
125
150
175
2007 2008 2009 2010 2011 2012 2013
9177
104132 128 136
155
1000 Tonnes
Indonesia
0
5
10
15
20
25
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
1000 tonnesJan-Apr 2014 compared to 2013 : - 8%
2013
2014
Jan-Apr 2014 compared to 2013 : - 8%
0
5
10
15
20
25
1000 tonnes
Jan-May 2014 compared to 2013 : + 4%
2009
2010
0
50
100
150
200
250
2007 2008 2009 2010 2011 2012 2013
91 77104
132 128 136155
1000 Tonnes
Indonesia
0
2
4
6
8
10
12
14
16
18
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
1000 tonnes
Jan-May 2014 compared to 2013 : + 4%
2013
2014
2014
24 September 2014 36
Main Dairy Importers (W.M.P. 1/2)
0
100
200
300
400
500
600
700
2007 2008 2009 2010 2011 2012 2013
58 46
177
326 320406
619
1000 Tonnes
China
0
20
40
60
80
100
120
140
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
1000 tonnes
Jan-Jul 2014 compared to 2013 : + 67%
2013
2014
0
50
100
150
200
250
300
350
2007 2008 2009 2010 2011 2012 2013
160 153200
167204 188
142
1000 Tonnes
Algeria
0
10
20
30
40
50
60
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
1000 tonnes
Jan-Apr 2014 compared to 2013 : + 14%
2013
2014
Jan-Apr 2014 compared to 2013 : + 14%
24 September 2014 37
Main Dairy Importers (W.M.P. 2/2)
0
50
100
150
200
250
300
350
2007 2008 2009 2010 2011 2012 2013
61 73 74 83 81 7490
1000 Tonnes
Singapore
0
50
100
150
200
250
300
350
2007 2008 2009 2010 2011 2012 2013
110
243215
51106
216170
1000 Tonnes
Venezuela
0
10
20
30
40
50
60
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
1000 tonnes
Jan-Jun 2014 compared to 2013 : - 19%
2013
2014
0
10
20
30
40
50
60
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
1000 tonnesJan-Jun 2014 compared to 2013 : + 50%
2013
2013
2014
Jan-Jun 2014 compared to 2013 : + 50%
24 September 2014 38
Main Dairy Importers (Cheese – 1/2)
0
50
100
150
200
250
300
350
2007 2008 2009 2010 2011 2012 2013
234 248 229
294 296 316327
1000 Tonnes
Russia
0
5
10
15
20
25
30
35
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
1000 tonnes
Jan-Apr 2014 compared to 2013 : - 5%2013
2014
0
50
100
150
200
250
300
350
2007 2008 2009 2010 2011 2012 2013
225187 184 199
215 235 236
1000 Tonnes
Japan
0
5
10
15
20
25
30
35
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
1000 tonnes
Jan-Jul 2014 compared to 2013 : - 5%
2013
2014
24 September 2014 39
Main Dairy Importers (Cheese – 2/2)
0
50
100
150
200
250
300
350
2007 2008 2009 2010 2011 2012 2013
86 68 73 80 78 89103
1000 Tonnes
Mexico
0
50
100
150
200
250
300
350
2007 2008 2009 2010 2011 2012 2013
200171 162
138 143 154 148
1000 Tonnes
United States
0
5
10
15
20
25
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
1000 tonnes
Jan-Jun 2014 compared to 2013 : - 7%
2013
2014
0
5
10
15
20
25
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
1000 tonnes
Jan-Jul 2014 compared to 2013 : + 3%
2013
2014
24 September 2014 40
7.000
7.200
7.400
7.600
7.800
8.000
8.200
Jan
Fe
b
Ma
r
Apr
Ma
y
Jun
Jul
Aug
Sep
Oct
Nov
Dec
in t
on
ne
s
.
Adjusted U.S. milk production (months of constant length)
2011 2012 2013 2014
Source:USDA
Jan-Jul 2014 vs 2013 : + 1.7% (real monthly production)
24 September 2014 41 Source: Dairy Australia
,500
,600
,700
,800
,900
1,000
1,100
1,200
Ju
l
Au
g
Sep
Oc
t
No
v
Dec
Ja
n
Fe
b
Ma
r
Ap
r
Ma
y
Ju
n
in t
on
ne
s
Jul-Jun 2013/14 compared to 2012/13 : - 03%
Australian milk production
2011/12 2012/13 2013/14 2014/15
24 September 2014 42 Source: DCANZ - Fonterra
0
500
1 000
1 500
2 000
2 500
3 000
3 500
4 000
Ju
n
Ju
l
Au
g
Sep
Oct
No
v
Dec
Ja
n
Feb
Mar
Ap
r
May
in t
on
nes
.
Jun-Jun 2014/15 compared to 2013/14 : + 11%
NZ milk production
2011/12 2012/13 2013/14 2014/15
24 September 2014 43
Prices
in US$/t Oct-14 Nov-14 Dec-14 Jan-15 Feb-15 Mar-15
Weighted
average
price % change Oct-14 Nov-14 Dec-14 Jan-15 Feb-15 Mar-15
AMF n.a. 3 234 3 251 3 301 3 313 3 394 3 264 - 2.9% - 2.3% - 3.2% - 2.9% - 3.9% - 4.1%
Butter n.a. 2 645 2 700 2 706 2 895 n.a. 2 698 - 2.0% + 3.1% - 4.1% - 10.1% - 6.2%
BMP n.a. 3 130 3 115 3 265 n.a. n.a. 3 140 - 1.1% + 3.9% - 8.0% - 8.8%
Cheeses n.a. 3 056 3 057 3 122 n.a. n.a. 3 077 - 6.0% - 6.7% - 6.5% - 4.8%
MPC70 n.a. n.a. n.a. n.a. n.a. n.a. n.a.
Rennet Casein n.a. 8 271 8 404 8 435 n.a. n.a. 8 343 + 1.4% + 1.2% + 0.7% + 2.7%
Lactose n.a. n.a. n.a. n.a. n.a. n.a. n.a.
SMP 2 532 2 601 2 660 2 595 2 603 2 828 2 619 + 0.7% - 6.5% + 3.3% + 1.4% - 3.3% - 6.2% - 10.4%
WMP n.a. 2 670 2 696 2 694 2 723 2 873 2 692 + 0.7% + 1.9% + 1.2% - 1.0% - 4.2% - 0.5%
Source : GlobalDairyTrade (http://www.globaldairytrade.info/)
16 Sep 2014 1 € = 1.2929 $ (ECB rate)
in €/t Oct-14 Nov-14 Dec-14 Jan-15 Feb-15 Mar-15
Weighted
average price
AMF 2 501 2 515 2 553 2 562 2 625 2 525
Butter 2 046 2 088 2 093 2 239 2 086
BMP 2 421 2 409 2 525 2 429
Cheese 2 364 2 364 2 414 #VALUE! #VALUE! 2 380
MPC70 #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE!
Rennet Casein 6 397 6 500 6 524 #VALUE! #VALUE! 6 453
Lactose 6 367
SMP 1 958 2 012 2 058 2 007 2 013 2 187 2 026
WMP 2 065 2 085 2 084 2 106 2 222 2 082
% change by contract from previous
auction
Results of the GDT event 124 of 16.09.2014
ANNEX 2
Draft short-term prospects for EU dairy markets
European Commission
1
Draft short-term prospects
for EU dairy markets
Milk market observatory
24 September 2014
Sophie Hélaine
European Commission
2
Outline
• Which market signals are sent to farmers?
• The EU milk collection in the next months?
• 2015 milk collection
• The balance sheets
2
The next STO is to be published the second week of October
With the exception of certain MS, farmers do not face yet a drop in the milk price
3
Note: The farm gate milk price is expressed in real fat content Source: DG AGRI estimates based on MS notifications
4
No break in milk collection expected before the very end of the year
4
5.0% 5.0% 6.4%
7.6%
4.6% 4.7% 4.6% 3.3%
1.3% 0.1%
-0.6% -0.8%
-10%
-5%
0%
5%
10%
15%
20%
25%
30%
35%
9 000
9 500
10 000
10 500
11 000
11 500
12 000
12 500
13 000
13 500
20
14
ch
an
ge
co
w's
milk
de
live
red
('0
00
t)
'14/13
'14/12
2011
2012
2013
2014
2014 forecast
Source: DG AGRI (Work in progress)
5
A bigger break to be expected in the countries which might produce above quota?
5
900
950
1 000
1 050
1 100
1 150
apr
may jun jul
aug
sep
oct
no
v
dec jan
feb
mar
NL
2 200
2 300
2 400
2 500
2 600
2 700
2 800
2 900
apr
may jun jul
aug
sep
oct
no
v
dec jan
feb
mar
DE
11/12
12/13
13/14
14/15
360
380
400
420
440
460
480
apr
may jun jul
aug
sep
oct
no
v
dec jan
feb
mar
DK
100
200
300
400
500
600
700
800
900
apr
may jun jul
aug
sep
oct
no
v
dec jan
feb
mar
IE
Unit: 1000 tonnes Source: Eurostat and DG AGRI forecast from August 2014 (September for NL) (Work in progress)
6
Which magnitude of the decrease further to the embargo?
6
700
750
800
850
900
950
1 000
apr
may jun jul
aug
sep
oct
no
v
dec jan
feb
mar
PL
11/12
12/13
13/14
14/15
40
45
50
55
60
65
70
apr
may jun jul
aug
sep
oct
no
v
dec jan
feb
mar
EE
60
80
100
120
140
160
apr
may jun jul
aug
sep
oct
no
v
dec jan
feb
mar
LT
40
50
60
70
80
90
apr
may jun jul
aug
sep
oct
no
v
dec jan
feb
mar
LV
150
160
170
180
190
200
210
apr
may jun jul
aug
sep
oct
no
v
dec jan
feb
mar
FI
Unit: 1000 tonnes Source: Eurostat and DG AGRI forecast from August 2014 (Work in progress)
7
What about the other Member States?
7
1 500
1 600
1 700
1 800
1 900
2 000
2 100
2 200
2 300
2 400
apr
may jun jul
aug
sep
oct
no
v
dec jan
feb
mar
FR
11/12
12/13
13/14
14/15
400
420
440
460
480
500
520
540
560
apr
may jun jul
aug
sep
oct
no
v
dec jan
feb
mar
ES
700
750
800
850
900
950
apr
may jun jul
aug
sep
oct
no
v
dec jan
feb
mar
IT
800
900
1 000
1 100
1 200
1 300
1 400
1 500
apr
may jun jul
aug
sep
oct
no
v
dec jan
feb
mar
UK
Unit: 1000 tonnes Source: Eurostat and DG AGRI forecast from August 2014 (Work in progress)
8
Milk collection in 2015?
8
3.4%
1.6%
-3%
-2%
-1%
0%
1%
2%
3%
4%
5%
6%
7%
2013/2012 2014/2013 2015/2014
Source: DG AGRI forecast (Work in progress)
9
Which re-direction of exports?
9
2014 EU Exports in 1000 tonnes
Change (1000 t) 2014 – 2013
Change (1000 t) 2015 – 2014
Jan-July known
Aug-Dec forecast
Year forecast
Jan-July
Aug-Dec
Year Jan-July
Aug-Dec
Year
Cheese Total 453 250 703 +1 -84 -84 -98 +130 +32
Russia 130 0 130 -14 -113 -127 -130 +100 -30
Other 323 250 573 +15 +29 +44 +32 +30 +62
Butter Total 94 37 131 +20 -5 +15 -13 +23 +10
Russia 24 0 24 +5 -18 -13 -24 +15 -9
Other 71 37 108 +14 +13 +28 +11 +8 +19
SMP Total 383 185 568 +144 +18 +162 +37 +43 +80
Russia 9 0 9 +1 -13 -12 -9 +10 +1
Other 374 185 559 +144 +30 +174 +46 +33 +79
WMP Total 246 169 415 +29 +12 +41 +7 +2 +9
FDP Total 421 243 664 +70 +16 +87 +10 +57 +67
Russia 35 0 35 +8 -22 -14 -35 +20 -15
Other 386 243 630 +62 +38 +100 +45 +37 +81
Source: Eurostat – Comext for Jan- July and DG AGRI forecast for Aug-Dec (Work in progress)
The use of milk
10
Jan-July* 2014/13
Aug-Dec f 2014/13
2014 f 2014/13 f 2015/14 f
Milk col. (million t) +5.4% +0.7% 146.1 +3.4% +1.6%
CHEESE
Prod. (1000 t) +2.3% +0.7% 9 457 +1.7% +1%
Exports (1000 t) 0% -25% 703 -11% +5%
Dom. Cons.** (kg/cap) 17.4 +2.6% +0.5%
BUTTER
Prod. (1000 t) +2.9% +6.9% 2 222 +4.5% +2%
Exports (1000 t) +26% -11% 131 +13% +8%
Dom. Cons.** (kg/cap) 4.2 +4.6% +1.4%
FRESH DAIRY PRODUCTS
Prod. (1000 t) +0.3% +0.3% 47 186 +0.3% +0.5%
Exports (1000 t) +20% +7% 664 +15% +10%
Dom. Cons.** (kg/cap) 91.3 -0.1% +0.2%
Note: * Jan-July change versus 2013 based on Eurostat figures excluding FR and estimating DK (except for milk) ** Including change in stocks Source: DG AGRI (Work in progress)
The use of milk
11
Jan-July* 2014/13
Aug-Dec 2014/13
2014 2014/13 2015/14
Milk col. (million t) +5.4% +0.7% 146.1 +3.4% +1.6%
SMP
Prod. (1000 t) +20% +15% 1 301 +18% +8%
Exports (1000 t) +60% +11% 568 +40% +14%
Dom. use** (1000 t) 734 +5% +3%
WMP
Prod. (1000 t) +14% +6% 778 +11% +2%
Exports (1000 t) +13% +8% 415 +11% +2%
Dom. use** (1000 t) 364 +10% +3%
Note: * Jan-July change versus 2013 based on Eurostat figures excluding FR and estimating DK (except for milk) ** Including change in stocks Source: DG AGRI (Work in progress)
12
For further information
• STO http://ec.europa.eu/agriculture/markets-and-prices/short-term-outlook/index_en.htm
• MTO http://ec.europa.eu/agriculture/markets-and-prices/medium-term-outlook/index_en.htm
• OECD-FAO Outlook http://www.oecd.org/site/oecd-faoagriculturaloutlook/
http://www.compareyourcountry.org/chart?cr=ch&cr1=mk&lg=en&project=agricultural-outlook&page=1
12
Thank you
http://ec.europa.eu/agriculture/markets-and-prices/short-term-outlook/index_en.htmhttp://ec.europa.eu/agriculture/markets-and-prices/short-term-outlook/index_en.htmhttp://ec.europa.eu/agriculture/markets-and-prices/short-term-outlook/index_en.htmhttp://ec.europa.eu/agriculture/markets-and-prices/short-term-outlook/index_en.htmhttp://ec.europa.eu/agriculture/markets-and-prices/short-term-outlook/index_en.htmhttp://ec.europa.eu/agriculture/markets-and-prices/short-term-outlook/index_en.htmhttp://ec.europa.eu/agriculture/markets-and-prices/short-term-outlook/index_en.htmhttp://ec.europa.eu/agriculture/markets-and-prices/short-term-outlook/index_en.htmhttp://ec.europa.eu/agriculture/markets-and-prices/short-term-outlook/index_en.htmhttp://ec.europa.eu/agriculture/markets-and-prices/medium-term-outlook/index_en.htmhttp://ec.europa.eu/agriculture/markets-and-prices/medium-term-outlook/index_en.htmhttp://ec.europa.eu/agriculture/markets-and-prices/medium-term-outlook/index_en.htmhttp://ec.europa.eu/agriculture/markets-and-prices/medium-term-outlook/index_en.htmhttp://ec.europa.eu/agriculture/markets-and-prices/medium-term-outlook/index_en.htmhttp://ec.europa.eu/agriculture/markets-and-prices/medium-term-outlook/index_en.htmhttp://ec.europa.eu/agriculture/markets-and-prices/medium-term-outlook/index_en.htmhttp://ec.europa.eu/agriculture/markets-and-prices/medium-term-outlook/index_en.htmhttp://ec.europa.eu/agriculture/markets-and-prices/medium-term-outlook/index_en.htmhttp://www.compareyourcountry.org/chart?cr=ch&cr1=mk&lg=en&project=agricultural-outlook&page=1http://www.compareyourcountry.org/chart?cr=ch&cr1=mk&lg=en&project=agricultural-outlook&page=1http://www.compareyourcountry.org/chart?cr=ch&cr1=mk&lg=en&project=agricultural-outlook&page=1http://www.compareyourcountry.org/chart?cr=ch&cr1=mk&lg=en&project=agricultural-outlook&page=1http://www.compareyourcountry.org/chart?cr=ch&cr1=mk&lg=en&project=agricultural-outlook&page=1http://www.compareyourcountry.org/chart?cr=ch&cr1=mk&lg=en&project=agricultural-outlook&page=1http://www.compareyourcountry.org/chart?cr=ch&cr1=mk&lg=en&project=agricultural-outlook&page=1http://www.compareyourcountry.org/chart?cr=ch&cr1=mk&lg=en&project=agricultural-outlook&page=1http://www.compareyourcountry.org/chart?cr=ch&cr1=mk&lg=en&project=agricultural-outlook&page=1http://www.compareyourcountry.org/chart?cr=ch&cr1=mk&lg=en&project=agricultural-outlook&page=1
ANNEX 3
Dairy market update 24 September 2014
COPA-COGECA
Note: This document should not be regarded as an official position of COPA-COGECA but as a factual document.
Dairy market update 24 September 2014
Milk supply
Thanks to good climatic conditions, EU milk production has increased year-on-year (+5.4%, first seven
months)), US (+2.9% in August) and New Zealand (+16%, first seven months)). But if we look back at
the last two years, the production increases have been moderate (New Zealand +1.5%, EU +3.8%).
Milk production increases have become more moderate, but deliveries are still up year-on-year in
Germany (+2.4%), France (+6.2%, ) and UK (+6.9%, August). In the Netherlands, August deliveries
were down -0.3% compared to the same month of 2013. Average milk production increase in the EU
may end around 4% for the calendar year 2014. For next year, a return to the long-term trend of 2%
may be expected (which is the long-term global consumption growth), but with a wide variety of
trends across the EU.
World Market Since April, the market was impacted by the uncertainty about the Chinese imports. However, the EU statistics still show a strong demand from China. This may be related to new Chinese regulations, requiring foreign companies to get consent for importation. The Russian embargo came on top of that. Price levels in the international market are now back to the level of the summer of 2012. Volatility is clearly on the agenda because of deregulation (CAP) and greater market transparency. As we may expect, grassland conditions in the main exporting nations (EU, US, NZ) are good for milk production going forward into 2015. New Zealand
Fonterra has lowered payment forecasts from a record 8.50 NZD per kg of dry matter to 5.60 NZD,
which would be -34%. The last GlobalDairyTrade auction (September 16) showed stability, with no
change to the main GDT index, after many months of declining prices.
At GlobalDairyTrade in September 2013, whole milk powder was sold at prices around 5,100 USD per
tonne but at the same time this year the price was 2,700 USD. This is also the price level that
characterizes the market until March 2015 and has consequences for the futures market. At the
beginning of August future prices may have increased, but the GDT auction results have been used to
close the futures offered by NZX. Therefore the futures market has become very flat at levels just
below 3,000 USD for contracts well into 2015.
USA
In the USA, the stocks were low at the beginning of 2014, and milk production growth was limited. Record milk prices, along with lower feed costs, have resulted in very favourable margins for dairy producers to increase U.S. milk production. In August 2014, the increase was 2.6%, but the average production increase during the first seven months of 2014 was 1.9%. As a result, prices of butter and cheese are well above the world market including EU prices. The average farm milk prices were 27% above the level of 2013. As a result, the US is now much less present on the world market. The current forecast for the 2014 milk price is a record high, but the forecast for 2015 has already been reduced by a third.
Note: This document should not be regarded as an official position of COPA-COGECA but as a factual document.
The graph below shows that the Chicago futures for Class III milk January 2015 contracts’ market is still firm (USD18.83 per 100 cwt, which is about € 31.4 per 100 kg at 3.5% fat)
European Union We know that the growth of the EU market is limited at best, so production increases need to be
exported. This has also happened as we can take from the statistics published by the European
Commission and milk prices remained at a relative high level.
However, the EU was hit by the Russian boycott on 7 August. Approximately 260,000 tons of cheese
and 40,000 tonnes of butter must now be redirected. This constitutes about 1.5% of the EU milk in
terms of equivalent production. Cheese production has already been reduced in several countries.
Prices paid in markets were below € 3.00 per kg. We need to increase exports so we need to find new
outlets. A question is: will the Russians still consume cheeses and is the international dairy market
after all a ‘zero sum game’? Annual demand growth is estimated at 2.0% per year by FAO/OECD,
which is more than the direct impact of the Russians sanctions on the EU-sector. However, milk
prices are now under pressure.
The impact would have been bigger had the embargo struck in April-May, at our milk production
peak. Also the lower euro-dollar exchange rate of recent weeks has supported EU exports.
At current cheese and butter prices, milk prices would be 30-32 eurocents per kg. For example, the
so-called IFE raw material value based on butter and skimmed milk powder quotations in the EU in
August was down to 32.4 cents per kg (4% fat).
The latest market information shows that the prices for fresh dairy have increased somewhat from
the late lows, with cream and skimmed milk concentrates on the up. However, young cheese is sold
at prices as low as € 2.75 per kg.
The European Union has responded well to the Russian boycott with private storage support for
SMP, butter and cheeses. Even where the effect in volumes seems limited, this may have helped to
stabilise markets and we now seem to have reached the bottom in the global and European market.
However, the Commission has repealed the private storage scheme for cheeses on 22 September.
Note: This document should not be regarded as an official position of COPA-COGECA but as a factual document.
This may cause new uncertainty in the market. Many operators are still looking for ways to cope with
the effects of the Russian boycott.
Milk prices
The LTO International Milk Prices Comparison shows an average milk prices per standard milk (4.2% fat) of 38.65 euro per 100 kg for July 2014 (see graph below).
Graph: the average paid milk price per kg standard milk (4.2%) of July 2014 was € 0.66 above the same month of 2013. But then the trend was up, now the trend is down. Source: LTO Milkprices.
The table below provides some information about recent milk price developments, taken from LTO
Milkprices.
Most recent milk price change (eurocent)
Aug Sept Oct 2014 Cumulative
Milcobel -1,0 -6,0 including August
Alois Müller, Leppersdorf
-1,0 -4,5 including August
DMK 0 -3,0 including August
Arla Foods DK -1,2 -1,5 -4,6 including September
Hämeenlinnan O.
Bongrain (Basse Normandie)
Danone (Pas de Calais)
Lactalis (Pays de la Loire)
Sodiaal Union
Dairy Crest (Davidstow) -1.1 ppl -1,75ppl -2.85 ppl Including October
First Milk (compositional)
-1.25ppl -0.5 ppl -3.0 ppl -5.9 ppl Including October. Since April, price drop was 7.4 ppl
Glanbia -2 -6 Including August
Note: This document should not be regarded as an official position of COPA-COGECA but as a factual document.
Kerry Agribusiness
Granarolo (North) -2 0 0 -0,25
DOC Cheese 0 -3,5 -11 including September
Royal FrieslandCampina 0,25 -1,75 -6 including September
USA Class III in US$/cwt average Class III price January-August 2014: 27% higher than in 2013
Fonterra Cash pay-out (milk price + dividend), 2013/14: 8,50, 2014/15: 5,60 (-34%)
From this table, the following conclusions may be drawn:
- The average 2014 advance payments by Glanbia, Kerry and Milcobel will be below the
average level of 2013, even if their payments would stay level for the rest of this year.
- If the milk price of October, November and December is 1 eurocent per kg below the level in
the same month of 2013, then Alois Müller’s payments (Leppersdorf) will also end below the
2013 average
- We expect the average 2014 payments of the other dairies in the comparison to be above
the average of 2013 because of the relatively high milk prices of the beginning of 2014. The
weaker euro is also helpful for the dairies in the Eurozone.
- For Granarolo (Italy), the average 2014 milk price will be € 2 per kg above the average of
2013, thanks to a contract.
- For the French dairies, it is a bit more difficult to make predictions, but also in France the
average 2014 milk prices will be above the 2013 level. In the first half of 2014, the prices
level was 4-5 eurocent per kg higher than in 2013
- In Great Britain, the official July price was 32.41 ppl. For the UK, the average was 31.79 ppl.
Arla dropped the milk prices 4,68ppl (liquid) from April to October. Muller Wiseman Dairies
Milk Group dropped the price 3.50 ppl between April and October. Significant price cuts
have been announced by milk buyers which are not reflected in these prices.
- It is interesting to note the rising milk prices in the USA, while Fonterra is lowering it’s
forecast considerably (-34%).
In Baltic States, at the moment, prices range from 18-23.5 €/100 kg, 30-40% drop compared to the
beginning of the year. There is still downward pressure.
For Lithuania, below some examples of prices paid to coops/farmers (from contracts):
Period Price of raw milk, without VAT, LTL/t (with/without transport)
Receiver (farmer/coop.)
Company A to cooperative
2013.08.01-31 1120/1090 Cooperative
2013.09.01-30 1180/1150 Cooperative
2013.10.01-31 1210/1180 Cooperative
2013.11.01-30 1160/1130 Cooperative
2013.12.01-31 1180/1150 Cooperative
2014.01.01-31 1180/1150 Cooperative
2014.02.01-28 1230/1200 Cooperative
2014.03.01-31 1170/1140 Cooperative
Note: This document should not be regarded as an official position of COPA-COGECA but as a factual document.
2014.04.01-30 1030/1000 Cooperative
2014.05.01-31 860/830 Cooperative
2014.06.01-30 830/800 Cooperative
2014.07.01-31 860/830 Cooperative
2014.08.01-31 870/840 Cooperative
2014.09.01-30 695/665 Cooperative
Comparing 2013.09 with 2014.09, the price dropped down by 41 proc.
Company B to cooperative
2013.08.01-31 1130/1090 Cooperative
2013.09.01-30 1190/1150 Cooperative
2013.10.01-31 1230/1190 Cooperative
2013.11.01-30 1200/1160 Cooperative
2013.12.01-31 1195/1155 Cooperative
2014.01.01-31 1210/1170 Cooperative
2014.02.01-28 1240/1200 Cooperative
2014.03.01-31 1180/1140 Cooperative
2014.04.01-30 1080/1040 Cooperative
2014.05.01-31 1040 (for the first 500 t)/1000 (870/830 for the next volumes)
Cooperative
2014.06.01-30 850/810 Cooperative
2014.07.01-31 880/840 Cooperative
2014.08.01-31 890/850 Cooperative
2014.09.01-30 740/700 Cooperative
Comparing 2013.09 with 2014.09, the price dropped down by 38 proc.
Cooperative to farmer
2014.01.01-30 1060 Farmer
2014.02.01-15 1130 Farmer
2014.02.16-28 1110 Farmer
2014.03.01-31 1130 Farmer
2014.04.01-15 1130 Farmer
2014.04.16-30 1070 Farmer
2014.05.01-15 990 Farmer
2014.05.16-31 860 Farmer
2014.06.01-15 860 Farmer
2014.06.16-30 840 Farmer
2014.07.01-15 890 Farmer
2014.07.16-31 870 Farmer
2014.08.01-31 870 Farmer
Comparing 2014.02 with 2014.08, the price dropped down by 23 proc.
Company C to cooperative
2013.12.01-2014.01.31
1175 Cooperative
2014.02.01-28 1220 Cooperative
2014.03.01-31 1190 Cooperative
2014.04.01-30 1020 Cooperative
2014.05.01-31 830 Cooperative
2014.06.01-30 810 Cooperative
2014.07.01-31 880 Cooperative
2014.08.01-31 860 Cooperative
Comparing 2014.02 with 2014.08, the price dropped down by 30 proc.
Note: This document should not be regarded as an official position of COPA-COGECA but as a factual document.
Company D to cooperative
2014.01.01-31 1250 Cooperative
2014.02.01-28 1260 Cooperative
2014.03.01-31 1250 Cooperative
2014.05.01-31 850 Cooperative
2014.06.01-30 830 Cooperative
2014.07.01-31 870 Cooperative
2014.08.01-31 910 Cooperative
2014.09.01-30 660 Cooperative
Comparing 2014.02 with 2014.09, the price dropped down by 48 proc.
Company E to cooperative
2014.04.16 (atbuline data,
informacija gauta 04.28)
870/820 Cooperative
2014.08.15 780/730 Cooperative
Company F to cooperative
2014.08.01-31 920 Cooperative
2014.09.01-30 670 Cooperative
Company G to cooperative
2014.08.01-15 910 Cooperative
2014.08.16-31 810 Cooperative
2014.09.01-30 660 Cooperative
Company H to cooperative
2014.01.01-30 1090 Cooperative
2014.02.01-28 1110 Cooperative
2014.03.01-31 1110 Cooperative
2014.04.01-30 970 Cooperative
2014.05.01-15 880 Cooperative
2014.05.16-31 900 Cooperative
2014.06.01-31 840 Cooperative
2014.07.01-15 840 Cooperative
2014.07.16-31 860 Cooperative
2014.08.01-15 770 Cooperative
2014.08.16-31 670 Cooperative
Comparing 2014.02 with 2014.08, the price dropped down by 40 proc.
In Hungary, the price of raw milk moves around 30-32 €/100 kg. After contracts finish in October 2014,
significant price drops are expected.
Feed prices
There is a lot of pressure on the price for feed ingredients in the world market. The US expects record
harvests for soyabean and wheat in 2014. In northwest Europe, quotations for wheat are
approaching € 1.50 per kg. The global grain and oilseed markets moved down further again last week
after the latest USDA world supply and demand estimates were revealed. While expectations are for
further increases to both global supply and demand, the level of demand is not large enough to
Note: This document should not be regarded as an official position of COPA-COGECA but as a factual document.
offset the record crops. Consequently, end-season stock projections were increased for wheat, maize
and soybeans and prices have declined in response. This may indicate much lower concentrate prices
for dairy towards the end of 2014. This added to the reasonable weather conditions in many regions
(early spring, recent rain fall in parts of Europe, including Brussels) may help dairy farmers to reduce
costs of production this year and the first months of 2015.
Conclusions
- Certain member states are struggling with the effects of the Russian boycott and this is
impacting on the whole of the internal European market
- Milk prices are under pressure
- The European Union has responded well with private storage support for SMP, butter and
cheeses.
- Even where the effect in volumes seems limited, this may have helped to stabilise markets
and we now seem to have reached the bottom in the global and European market.
- The situation in the US is very different from ours, with prices for cheeses and butter
reaching record levels. The US is now much less competitive on the world market. For how
long this will last, we don’t know. US milk production was up 2.6% in August year-on-year,
which is more than earlier this year.
- However, the Commission has repealed the private storage scheme for cheeses on 22
September. This may cause new uncertainty in the market. Many operators are still looking
for ways to cope with the effects of the Russian boycott.
- Because of the low milk prices in H1 2013 and much higher milk prices in H1 2014, we expect
average 2014 EU milk prices still to be above the average of 2013 for most dairies. But the
market trend is now downwards, and the situation in 2015 will be very different from the
start!
- falling feed prices will not be enough to compensate farmers for lower milk prices
Copa-Cogeca delegation to the Milk Market Observatory meeting
ANNEX 4
EU dairy products monthly stock situation
EDA
EU dairy products monthly stock situation
Milk Market Observatory
Economic Board
Sept 24th, 2014
Gérard CALBRIX
Director Economic Affairs
ATLA
Methodology
• For each dairy product, these stock estimates are based on the equation: – Stock variation = EU production + EU import – EU internal consumption – EU exports
• ZMB balance sheets and forecasts have been used as references for : – End of year stocks levels in 2012 and 2013
– Yearly consumption levels in 2012, 2013 and 2014 forecast
• Monthly production statistics are based on ZMB Dairy World publications.
• Exports and imports figures are based on MMO website figures.
• The initial stocks entered in the model for end of 2011 are : – SMP: 152 000 t
– Butter: 80 000 t
– Cheese: 200 000 t (arbitrary basis)
• The qualification of stock levels (green, orange or red) is based on the EDA analysts’ personal views and past market observation.
ANNEX 5
Perspectives from the Dairy Trade
Eucolait
Perspectives from the Dairy
Trade
Milk Market Observatory Meeting
24 September 2014
Outline
• Global Supply
• Global Exports
• Global Demand
• Global Stocks
• Conclusions
Global Supply
-1000 0 1000 2000 3000 4000 5000 6000 7000 8000 9000
Combined evolution
USA
EU
Australia
New Zealand
Uruguay
Argentina
Comparing milk production in 2014 with 2013 January - September (with partial extrapolation for Q3 - 2014 data)
000 tonnes
2% GROWTH RATE
Global Supply
-500 0 500 1000 1500 2000 2500 3000
EU exports to Russia in milk equiv.
Combined evolution
USA
EU
Australia
New Zealand
Uruguay
Argentina
Comparing 2014 milk production with 2013 for the major dairy exporting countries
Q3 (extrapolated from most recent data) Q2 Q1
2% GROWTH RATE
000 tonnes
-6,9% in Q3
- 5,7% in Q3
+ 6,3 % in Q3
+ 1,5 % in Q3
+4,1 % in Q3
+ 3,5 % in Q3
+ 3,5 % in Q3
Global Supply
• Oversupply in key producing regions persists
• Somewhat slower combined growth expected in Q3 versus the first half of the year, US being the exception
• Russian ban has potential to worsen global oversupply.
EU Supply
• EU production was up 5% during first half of 2014
• Conditions remain favourable: high milk prices (lagging market reality), lower feed prices, low energy costs and favourable weather
• No signs of lower milk production
US Supply
• Milk production year to date:
– June 2014: +2,2% versus June 2013
– July 2014: + 3,9% versus July 2013
– August 2014: +2,5% versus August 2013
• Outlook for rest of 2014
– September growth likely to be similar to July’s
– Production conditions remain very favourable
– Domestic consumption appears to have been growing at a pace well above 1% per year.
New Zealand supply
• Milk Production
– DCANZ has reported until June
• April-June 2014 is up 29% from April-June 2013 (but down 10% from April-June 2012)
• 2013-14 season: +9%
– Outlook for new season
• Growth rate appears to be slowing down Fonterra collection in July + 8,3% and in August + 5 %
• Fonterra forecast for 2014/15 season revised down to + 2% due to effect of lower milk price
Australia supply
• Milk Production
– 2013/14 season finished on par with 2012/13 after strong second half
– July 2014 production: +1,5% versus July 2013
• Outlook
– Q3 growth expected to be in line with July’s
– 2014/2015 season + 1 to 3% (9,3-9,5 billion litres)
Argentina
• Milk Production
– After promising start beginning of 2014 milk production started lagging behind 2013 figures
• May 2014 is down 7,3% from May 2013
• June 2014 is down 8,4% from June 2013
• Outlook
– No immediate improvement expected, bad weather conditions (floods)
Uruguay Supply
• Milk Production
– May 2014 production down 0,7% from 2013
– June 2014 estimate down 6,1% from 2013
– July 2014 estimate down 5,7% from 2013
• Outlook
– No immediate improvement expected
Global Exports
0
50000
100000
150000
200000
250000MONTHLY EXPORTS (EU+USA+NZ+AUS+ARG+URU)
SMP WMP WHEY CHEESE
BUTTER Linear (SMP) Linear (WMP) Linear (WHEY)
Met
ric
Ton
ne
s
Global Exports
• Most products performing below trend line
– technical correction due to price development notably in China
• Global exports have potential to increase as global demand is there
EU Exports
0
20
40
60
80
100
120
140
3 MONTH ROLLING AVERAGE, Index Q1-2014=100
SMP (100 = 48 775 MT) WMP (100 = 33 747 MT) CHEESE (100 = 62 474 MT)
WHEY (100 = 42 124 MT) LACTOSE (100 = 14 196 MT) BUTTER (100 = 9 732 MT)
EU Exports
• Very good first half of 2014 with gains for most products (in comparison to first half of 2013)
• Especially milk powders and butter doing well
• Cheese and whey exports up in July, mainly to Russia
• No post Russia ban data available yet
US Exports
0
20
40
60
80
100
120
140
3 MONTH ROLLING AVERAGE (INDEX Q1 2014 = 100)
SMP (100 = 44 596 MT) WMP (100 = 3 290 MT) WHEY (100 = 39 840 MT) CHEESE (100 = 33 279 MT) BUTTER (100 = 8 889 MT)
NZ Exports
0
20
40
60
80
100
120
140
160
03/2013 04/2013 05/2013 06/2013 07/2013 08/2013 09/2013 10/2013 11/2013 12/2013 01/2014 02/2014 03/2014 04/2014 05/2014 06/2014 07/2014
3 MONTH ROLLING AVERAGE (Index Q1 -2014 = 100)
WMP (100 = 146 476 MT) SMP (100 = 30 109 MT) BUTTER (100 = 31 975 MT)
AMF (100 = 17 163 MT) CHEESE (100 = 24 639 MT)
Australia Exports
0.0
20.0
40.0
60.0
80.0
100.0
120.0
140.0
160.0
3 MONTH ROLLING AVERAGE (Index Q1- 2014 = 100)
SMP (100 = 15 325 MT) WMP (100 = 8 646 MT) BUTTER (100 = 3 532 MT) CHEESE (100 = 11 946 MT) WHEY (100 = 2 366 MT)
Argentina Exports
0
20
40
60
80
100
120
140
160
180
200
3 MONTH ROLLING AVERAGE (Q1 2014 = 100)
SMP (100 = 1 785 MT) WMP (100 = 12 792 MT) WHEY (100 = 5 038 MT) CHEESE (100 = 4 737 MT) BUTTER (100 = 1049 MT)
Uruguay Exports
0
50
100
150
200
250
300
3 MONTH ROLLING AVERAGE (INDEX Q1 2014 = 100)
WMP (100 = 7 349 MT) SMP (100 = 1 342 MT) CHEESE (100 = 3 540 MT) BUTTER (100 = 1 214 MT)
China Imports
0
20
40
60
80
100
120
140
160
3 MONTH ROLLING AVERAGE (Index Q1-2014 = 100)
WMP (100 = 110 215 MT) SMP (100 = 30 027 MT) WHEY (100 = 29 386 MT) LACTOSE (100 = 6 441 MT)
CHEESE (100 = 5 977 MT) BUTTER (100 = 7 091 MT) AMF (100 = 3 682 MT) CASEIN(ATES) (100 = 1 274 MT)
Indonesia Imports
0
50
100
150
200
250
3 MONTH ROLLING AVERAGE (Index Q1-2014 = 100)
SMP (100 = 12 691 MT) WMP (100 = 2962 MT) WHEY (100 = 6604 MT) LACTOSE (100 = 1709 MT)
CHEESE (100 = 1247 MT) AMF (100 = 535 MT) BUTTER (100 = 742 MT)
Philippines Imports
0
20
40
60
80
100
120
140
160
180
3 MONTH ROLLING AVERAGE (INDEX Q1-2014 = 100)
SMP (100 = 9 662 MT) WMP (100 = 1 956 MT) WHEY (100 = 4 050 MT)
CHEESE (100 = 932 MT) AMF (100 = 1 114 MT) LACTOSE (100 = 1030 MT)
Mexico Imports
0
20
40
60
80
100
120
140
3 MONTH ROLLING AVERAGE (INDEX Q1-2014 = 100)
SMP (100 = 14 716 MT) CHEESE (100 = 8 394 MT) WHEY (100 = 4 418 MT)
LACTOSE (100 = 2 665 MT) CASEIN(ATES) (100 = 1 388 MT)
Algeria Imports
0
50
100
150
200
250
3 MONTH ROLLING AVERAGE (INDEX Q4-2013 = 100)
WMP (100 = 12 445 MT) SMP (100 = 7 969 MT) CHEESE (100 = 1427 MT) BUTTER (100 = 420 MT)
Russia Imports
0
50
100
150
200
250
COMBINED EXPORTS TO RUSSIA (EU+NZ+USA+ARG+URU+AUS) 3 MONTH ROLLING AVERAGE (Index Q1-2014 = 100)
CHEESE (100 = 21 975 MT) BUTTER (100 = 9 156 MT) SMP (100 = 1 882 MT) WMP (100 = 1 029 MT)
WHEY (100 =2 767 MT) DAIRY SPREADS (100 =798 MT) AMF (100 = 1 390 MT)
Global Stocks
We hear:
• Stocks have increased in most regions following high milk production
• In EU, especially SMP, butter and cheese stocks appear to be significantly higher than in Q3/2013, less so for whey and WMP
• US: in particular SMP stocks have increased
• Oceania: higher for most products, in particular WMP
• South America: little changes
Conclusions
• Global demand is good
• Current imbalance is supply driven
• Direction of the market uncertain
• Supply reaction to lower prices is needed
Thank You
Eucolait
www.eucolait.eu
@Eucolait
• Sources used in presentation: GTIS, USDA, Dairy Australia, Fonterra DCANZ, Inale
http://www.eucolait.eu/