2 August 2002

Managers give mixed signals

MILK market managers have sent out mixed signals for dairy prices from their fortnightly meeting in Brussels, raising aids for casein production, but cutting the price at which they will accept skimmed milk powder into stores.

The decision on casein effectively lifts the processing aid by a further 20% to k58.6/t (£37/t) of skimmed milk used, equivalent to about 0.63p/litre.

The move has been especially welcomed by the Irish, who produce a lot of the food ingredient, much of which goes for export to the US. It should help offset recent unfavourable exchange rate movements, said Irish Creamery Milk Suppliers Association dairy chairman Jackie Cahill, referring to the recent k strengthening against the US$.

UK dairy farmers couldalso benefit. Even though the UK is only a minor producer of casein, anything which absorbs more liquid milk elsewherein Europe should help themarket overall.

But, on the downside, the effective support price for SMP has been cut, with the commission only accepting bids at 96.5% of the full intervention rate.

This is the third time in six weeks tendering has been used, the first two accepting bids at 98.5%, then 97.5% of the full price.

The latest sale saw 6637t of SMP taken in at up to k1983/t (£1252/t), with 1820t rejected. Most of this, 3492t, was from Ireland, with just 840t from the UK. The ICMSA reckons the milk support price had dropped by 0.56c/litre (0.35p/litre) due to the tendering process. &#42