Dairy prices are still in the doldrums with a .4% drop in GlobalDairyTrade’s price index this morning.
It doesn’t help that the EU’s skim milk powder intervention scheme has been officially raised to a record 350,000 tonnes.
AgriHQ dairy analyst Susan Kilsby said the scheme takes the excess milk from the market and puts it into storage, which has a mixed effect on prices.
“In the short term it’s providing some stability in the market, and some support around skim milk powder levels.
“But what it does over the longer term is we’ve now got skim milk powder stocks built up in the EU to record levels so it’s going to take several years for those stocks to work through the market as it’s slowly released, and that will only happen once milk supply slows down and the markets rebalance.”
Ms Kilsby said this would prevent milk powder prices from rising quickly for quite some time.
“It certainly will keep prices for skim milk powder down while we sell more of our milk powder in the format of whole milk powder – there is a link between the two products because they can be substituted to a certain degree.
“It’s certainly going to hamper dairy commodity prices from lifting quickly even when the milk supply does slow down in Europe.” . .
However, we were in Zambia with dairy farmers from Holland and Ireland lst month and they are no happier about milk prices than we are.