World dairy markets stall close to 2011 prices

Global dairy commodity markets remain finely balanced, with prices likely to be underpinned going into the spring, according to the Dairy Group.

“The welcome recovery in commodity values from the calamitous decline in spring 2012 has stalled close to 2011 values,” said director Nick Holt-Martyn. “Demand is following a similar pattern: with the southern hemisphere peak now passed, attention will switch to the northern hemisphere in 2013.”

The long-term weather forecast for the EU was favouring two cold months followed by average conditions, which could lead to a good start for 2013. “However, this is unlikely to affect production until May at the earliest. The most likely scenario is for production to remain weak, with price pressure building as the winter progresses.”

Improved butter, skimmed milk powder and cream returns meant the UK’s market price equivalent climbed by 0.5p/litre to 30.62p/litre in November. “Whey has recovered, but there is continuing stagnation in cheese due to cheap Irish imports,” said Mr Holt-Martyn. “Weak profitability will affect confidence across the EU, which will keep milk production low and encourage higher EU market returns.”

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