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USDA Released their bi-weekly international prices today. Of note: Oceania butter prices back on the rise, EU dry whey prices increased sharply vs. last report and the firm undertones of all EU commodity comments listed below. Oceania (vs. Aug 5 report) Butter: $1.8370 (UP $0.0453) Skim Milk Powder: $1.3607 (UP $0.0169) Whole Milk Powder: $1.4288 (NO CHANGE) Cheddar Cheese: $1.7690 (NO CHANGE) Western Europe Butter: $2.2396 (DOWN $0.0057) Skim Milk Powder: $1.2871 (DOWN $0.0794) Whole Milk Powder: $1.6273 (DOWN $0.034) Whey Powder: $0.4536 (UP $0.0681) OCEANIA COMMENTARY CHEDDAR CHEESE: Cheese markets and prices in the Oceania region are holding steady. The new cheese production season is just about to resume as milk volumes start to increase. Cheese plants are ready to go as winter maintenance is now basically completed. Cheese handlers are stating that seasonal carryover stocks are low and they will be entering the new year at a comfortable level. Pre-season sales have been good and are in line with previous years and projections. WHOLE MILK POWDER (WMP): Whole milk powder markets and prices are firm. Lower prices recorded at the recent global/Dairy Trading event did ease some commercial pricing, but for the most part, prices remain stable to slightly higher. Traders and handlers are speculating that the trading event prices will soon be increasing. The Oceania milk production season is underway, especially in New Zealand, with increases still a few weeks away in Australia. Some manufacturers and handlers are stating that good whole milk commitments are already on the sales books, thus early season milk volumes will probably be cleared in this direction. SKIM MILK POWDER (SMP): Oceania skim milk powder markets and prices are mixed, although the market undertone is firm. Lower prices realized at the recent global/Dairy Trading event had little impact on overall pricing of Oceania supplies. Some traders and handlers eased their prices slightly, but in most instances, stable prices remain. Many traders feel that prices will stabilize at the upcoming trading event on September 7 and will probably increase in the near future. Milk production remains seasonally low, but increasing, thus stocks of new powder remain limited. BUTTER: Oceania butter markets and prices are firm. Butterfat volumes remain limited as milk volumes are seasonally low, but increasing. The 2010 - 2011 milk production season in now underway with milk volumes noticeably increasing in New Zealand with Australian output still at low levels. As milk volumes increase, the direction of early season milk volumes is often in question. Some manufacturers are stating that good whole milk volumes have been pre-sold, thus they feel early season milk volumes will be cleared into whole milk production, further limiting cream volumes for butter production. Usually, milk volumes increase at a pace that these diversions will not last too long. Traders and handlers are stating that regular and ongoing customer needs during the next few months are already on the sales books, with some additional buyer interest developing. At this time, these buyers remain cautious with their purchases and Oceania suppliers are cautious with their commitments. OCEANIA OVERVIEW: Milk production increases are starting to be reported out of New Zealand. Milk handlers are stating that the increases are not huge, but noticeable. In Australia, the beginning of the new milk production season is still a number of weeks away. Late winter weather conditions and temperatures continue to prevail. Grass growth remains dormant. Final milk production figures out of Australia were recently released for the 2009 - 2010 milk production year (July - June). As has been the case for much of the second half of the production year, end of season milk output has been stronger than previous year comparables. For June, milk output was 4.6% heavier than June 2009, thus the cumulative output for the year was down 3.9% from the 2008 - 2009 year. Although the cumulative total still lagged the previous season, milk producers and handlers were pleased to see that the decline was much smaller than early season predictions. The 2009 - 2010 season ended on a positive note. Australian farmers are optimistic about the upcoming milk production season as conditions are very good for a strong start to the season. Farmers and milk handlers are stating that the milking herd ended the previous season on a positive note and wintered well, thus a positive start is also expected due to these factors. Typical winter weather patterns, not seen in many years in Australia, provided much needed moisture to replenish depleted water levels and reserves. With many positive factors pointing to a good milk production season in Australia, milk handlers are questioning how farmers will handle the financial end. Many feel that farmers will be conservative and pay down debt incurred in recent years versus expanding their operations. Following the August 3 global/Dairy Trading event, Oceania handlers and traders adjusted their prices somewhat, but often not to the average level of the various products traded. Traders and handlers continue to state that this is an auction which provides a market sentiment at that time, but is not setting ongoing price levels. Traders and handlers are speculating that recent price weakness at the trading event will stabilize and will probably start to increase in the near future. In September, trading will go to twice a month with the next event on September 7. As milk production seasonally increases, manufacturers and handlers are deciding which direction to go with early milk volumes. Many traders and handlers state that good whole milk powder volumes are already in the sales books, thus initial milk volumes will probably be cleared in this direction. New buyer interest remains slow in developing as buyers are cautious with their purchases. EU COMMENTARY SKIM MILK POWDER (SMP): European skim milk powder markets are mixed although the undertone is firm. Prices are steady to slightly lower. Much of the current weakness in price is being attributed to the weak Euro against the U.S. dollar. Stocks of powder are readily available for potential buyer interest. Much of Europe has been on holiday during August and sales have been limited. Traders and handlers are stating that buyer interest is starting to develop as the summer holiday season ends and buyers look for fall/winter needs. Powder production was slow to develop this season, but, in recent weeks, has attained stronger output. WHOLE MILK POWDER (WMP): European whole milk powder markets are generally steady although prices eased slightly. The significant portion of weakening prices is from the Euro/U.S. dollar conversion. Within the past two weeks, the Euro has declined against the dollar. European milk production is declining, thus whole milk powder production is trending lower. Traders and handlers are stating that stocks are available for buyer interest. The European summer holiday season is winding down, thus traders feel that buyers may be returning to the market within the next 2 - 4 weeks. BUTTER/BUTTEROIL: European butter markets and prices remain firm. Milk production is declining seasonally in Europe, thus is butter output. For much of the season, cream volumes have been limited and butter production has not been as strong as desired or projected. Cream handlers are stating that butterfat tests within milk are lower this year. This trend is not just limited to European milk output as this situation is also occurring in the U.S. The Dairy Management Committee will once again meet on August 26 after being on holiday since late July. Reports indicate that there are about 1,500 MT of intervention butter left for possible sellback. SWEET WHEY POWDER: European whey powder markets and prices are firm. Prices have been fluctuating both higher and lower over the past few weeks. Cheese production was strong early in the current milk production season, but now has eased as milk output declines and milk is being directed toward other manufactured dairy products. Whey stocks are available with most market activity centered around an internal or domestic market. Traders and handlers are stating that European stocks are often priced higher than international buyers are willing to pay. WESTERN OVERVIEW: The European milk production season continues to decline. Milk volumes appear to be holding up quite well on the down side of the season with early reports indicating that June's production was 2% above the previous year. On a year to date basis, milk output is about par with last year. Within recent weeks, heat and humidity levels have been high in many regions and will probably accelerate the seasonal decline. August is summer holiday time for many Europeans thus sales activity has been slow. Traders and handlers do indicate that Russian buyer interest continues, but often European prices are higher than desired, thus some buyers are looking beyond European borders for possible stocks. Whole and skim milk powder, along with cheese are items of most interest. Traders also are stating that some new buyer interest is developing as buyers start to look to fill fall/winter needs. For the most part, outside of butterfat, stocks are available for immediate and future needs. Early in the milk production season, milk volumes were being directed towards cheese output, but now other manufactured dairy products are realizing a better milk flow. The Dairy Management Committee will be returning from summer holiday on August 26 for the first time since late July. Traders and handlers are wondering if the balance of intervention butter (about 1,500 MT) will be cleared. Butterfat continues to be a limited item and previous sales of intervention butter were a welcomed item by many. Some butter/anhydrous milk fat from the U.S. is potentially scheduled to arrive in Europe during the next six months. |
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