Strong cheese values and weakening powder markets have led to a marked split between dairy commodity markets, according to a DairyCo report.
The Milk for Cheese Value Equivalent price is now 3.7p/litre or almost 13% higher than the Actual Milk Price Equivalent – the largest premium since August 2009.
"Current high prices for whey products is again making commodity cheese manufacture in the EU more attractive than butter and skimmed milk powder. The EU wholesale butter market remains weak, with supplies coming into the market from cheaper sources outside of the EU, as global exporters switch from the production of whole milk powder."
Global markets had held steady so far this year, and were likely to remain flat due to recent wholesale price stability and an anticipated slowdown in milk production growth. "There is a risk of stock build-up in the first half of 2012 if global economic conditions deteriorate as demand weakens."
EU values had been supported by the weaker euro, with whey powder prices up by 3% in January and 19% higher than last year.
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