Market report: Uncertain outlook for dairy markets in 2010

The outlook for dairy commodity markets this year remains uncertain, with weaker EU prices and burdensome intervention stocks overhanging the market.

In January, UK and EU commodity prices remained relatively stable, with British butter prices dropping by 3.6% from December, to £2700/t, and bulk cream values easing by 1.7% to £1130/t, according to DairyCo Datum‘s latest market update.

Skimmed milk powder prices dropped by 6.8% in the EU, and 12.5% on the world market, bringing them in line with the UK value of £1750/t. “With EU export subsidies reduced to zero from November 2009, any movements on the world market will, therefore, affect the UK market, making predictions on future price movements in this market difficult,” said the report.

Although forecast lower production in the USA, Oceania and the EU would help to support prices, the removal of EU export refunds had made it more difficult to export butter and Cheddar. “And the market continues to be hesitant due to the effect that the release of intervention stocks will have on wholesale markets.”