last update : 29.09...2014/09/24 · milk supply chain: ceja (young farmers), copa-cogeca...

o The 3rd meeting of the Milk Market Observatory economic board took place on 24 September 2014,

with the participation of experts from the member

organisations representing the various steps in the

milk supply chain: CEJA (young farmers), COPA-COGECA (producers and cooperatives), ECVC (Via

Campesina), EMB (European Milk Board), EDA

(dairy industry), Eucolait (dairy trade) and

Eurocommerce (retail).

o The meeting was opened with 2 presentations by DG AGRI on the milk market situation and on the

short term outlook. The major part of the meeting

was dedicated to the assessment of the market

situation and perspectives with a special focus on the Russian import ban and its impact on dairy

products.

o Downward pressure on prices registered since

early 2014 has been exacerbated by the introduction of the Russian ban (SMP -18.5%;

butter -9%; WMP -15%; Cheddar –8% and Edam -

3%). Negotiations between processors and

retailers are going on in some MS and downward price pressure is mounting. In some MS the

production of cheese for Russia has stopped and

been converted into SMP and butter. Product

prices seem to bottom out at the moment.

o Farmers are not facing yet a severe drop in milk price, except in some MS. It can take up to three

months like in France before milk prices adapt to

market conditions for dairy products. Forage

quality and quantity for the coming period are good. Feed prices are on a downward trend.

Therefore, farmers may not reduce milk production

before the very end of the year when all farmers

might experience price drops. In MS where production is over quota, a slowdown in milk

production could occur earlier in order for farmers

to limit their surplus levy bill. In some MS, farmers

have invested heavily and could face cash flow

difficulties. Only once facing these difficulties farmers may cull cows to recover some cash

facilities.

o In the draft short-term outlook prepared by the

Commission1, EU milk collection is nevertheless

1

Publication foreseen the second week of October

expected to show less pronounced growth

percentages in the 2nd half of the year, compared to the same period last year where significant

increases were registered. Some experts found the

assumptions (and results) of the short-term

outlook rather optimistic due to the time lag in

price transmission to farmers in some important

milk producing MS.

Consumption forecasts may seem inflated as they

include stock variation. However given the 2014

increase in milk collection and the difficulties met on the exporting markets, more products are

expected to remain on the domestic market

(whether in the form of increased stocks or

consumption). Re-directing products, notably cheese, and finding new customers cannot happen

from one day to the next.

The assessment of EU stock levels based on a

residual approach (production + imports –

consumption and exports) showed that in July 2014 all dairy commodity stocks appeared rather

high because of high production. Stock levels for

SMP and cheese appear to be comparable to that

of the summer 2012. In 2012, stocks reduced rapidly afterwards in the wake of the US drought.

Unlike SMP, butter stocks are assessed as being at

less worrying levels. Cheese stocks are expected to

get healthier given reduced cheese production in a

number of MS.

Oversupply in key producing regions of the world persists. As prices are on a downward trend,

buyers are holding off purchasing decisions as long as possible, depending on their stock position. For

the longer term, global exports are likely to

increase again, in line with demand.

o The market review showed the need to make sure

that market signals reach all actors in the milk supply chain, especially in today's oversupply

situation. Coming from high levels, prices have

been under pressure due to difficulties for the

market to absorb increased production in the major milk producing regions of the world and this

has been exacerbated by the Russian import ban.

This downward trend could continue if production

does not slow down. The uptake of the measures taken remains limited so far (with the exception of

PSA for cheese).

– -

Last update : 29.09.2014

Milk Market Observatory REP.Meb

MMO Economic Board

Meeting of 24 September 2014

ANNEX 1

Milk Market Situation

European Commission

Milk Market Situation

Brussels, 24 September 2014

24 September 2014 2

!!! Data from some Member States are confidential and are NOT included in this table !!!

EU Productions

Total Butter+ 2,9%

Skimmed-milk powder+ 20,0%

Milk powder cream, Whole milk powder

and partly skimmed milk

powder+ 13,9%

Cheese+ 2,3%

Fermented milk- 2,4%

Cows' Milk Collected

+ 5,8%

- 10% - 5% + 0% + 5% + 10% + 15% + 20% + 25% + 30%

Evo

luti

on

in

%

EU-28 Deliveries/Productions development (Jan - Jul 2014 compared to Jan - Jul 2013)

Source : MS' Communications to Eurostat

Rem : FR 2013-14 data not considered (except Milk)DK 2014.Apr>Jul data estimated (except Mi lk)

Total Butter+ 2,4%

Skimmed-milk powder+ 21,7%

Milk powder cream, Whole milk powder

and partly skimmed milk

powder+ 7,0%

Cheese+ 1,8%

Fermented milk- 2,7%

Cows' Milk Collected

+ 5,8%

- 10% - 5% + 0% + 5% + 10% + 15% + 20% + 25% + 30%

Evo

luti

on

in

%

EU-28 Deliveries/Productions development

(Apr 2014 - Jul 2014 compared to Apr 2013 - Jul 2013)

Source : MS' Communications to EurostatRem : FR 2013-14 data not considered (except Milk)

DK 2014.Apr>Jul data estimated (except Mi lk)

Following a data update, the figures shown in this chart differ from those presented in the MMO economic board meeting held on 24/09/2014

24 September 2014 3

-16% to -12%

-12% to -08%

-08% to -04%

-04% to +00%

+00% to +04%

+04% to +08%

+08% to +12%

+12% to +16%

n/a+7,9

+3,3

-0,5

+3,3

+4,4

+8,9

+7,1

-4,8+6,9

+7,4

+3,2

+9,4

+12,4

+8,5

+5,9

+5,4

+3,4

+4,1

+7,5

+4,1

+14,9+2,3

+1,1

+3,4

+2,9

+10,2


+5,1


24 September 2014 4

-20% to -15%

-15% to -10%

-10% to -05%

-05% to +00%

+00% to +03%

+03% to +07%

+07% to +09%

+09% to +20%

n/a+7,6

+5,9

+0,7

+2,8

+4,3

+8,8

+9,2

-4,6+7,6

+7,1

+3,6

+12,3

+12,5

+9,6

+6,8

+8,4

+2,6

+3,3

+7,6

+4,7

+16,2+3,3

+2,1

+3,1

+2,5

+8,8


+8,0


24 September 2014 5 Source: MS’ communications to Eurostat

10000

11000

12000

13000

14000

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

10

00

To

nn

es

EU - Cows' milk collected ( 30d ajusted months )

2014

2013

2012

2011

Last Update : Jan-Jul

Jan-Jul 2014/13 : +5,8%

Source : Estat - Newcronos


6

20

22

24

26

28

30

32

34

36

38

40

42

44

46

48

50

Jan 0

1

Jan 0

2

Jan 0

3

Jan 0

4

Jan 0

5

Jan 0

6

Jan 0

7

Jan 0

8

Jan 0

9

Jan 1

0

Jan 1

1

Jan 1

2

Jan 1

3

Jan 1

4

EUR/100 kgEU Raw Milk Prices Evolution (up to July 14)

Weighted EU Average (real fat content)

EU Milk Equivalent Price (based on EU SMP and Butter prices)

Milk Prices (LTO)

Source :MS’ communications under reg. 562/2005 & 479/2010 + LTO : Land- en Tuinbouworganisatie Nederland (http://www.milkprices.nl/)24 September 2014

24 September 2014 7

Source: MS’ communications under Reg. 479//2010

NB: The above national price averages are of mixed nature, some relate to standardised milk, others to milk with real fat and protein

content, pending harmonisation under reg. 479/2010

54,6

47,3

46,9

42,4

41,7

41,2

39,5

38,9

38,2

37,9

37,3

37,2

37,1

36,9

36,5

35,3

35,1

34,3

34,1

34,0

33,9

33,3

33,2

32,4

32,3

32,0

29,3

28,9

26,1

0

5

10

15

20

25

30

35

40

45

50

55

60

CY FI MT EL DK IT NL UK AT SE EU DE FR LU ES IE BE SI HR CZ BG PT SK HU EE PL LV RO LT

in E

UR

/1

00

kg

E U M I L K P R I C E S

Milk Price 2013

Milk Price 2014

Source : Member States (Reg. 479/2010)

( Jul 2014 vs Jul 2013 )

Estimates for DK, IT, SE

24 September 2014 8 Source: MS’ communications under Regs. 562/2005 and 479/2010

150

200

250

300

350

400

450

Jan

Feb

Mar

Apr

May

Jun

Jul

Aug

Sep

Oct

Nov

Dec

EU

R/1

00 k

g

Weekly EU SMP Prices

2011 2012 2013

Latest price : 221 EUR/100kg

Evolution compared to same period last year : -32%

24 September 2014 9

Source: MS’ communications under reg. 479/2010

270265

248

240

225221 219

213 212

150

170

190

210

230

250

270

290

310

330

350

GB CZ IE SK PL EU Avg. BE LV DE

in E

UR/1

00 kg

EU S.M.P. Prices (up to 14.09.2014)

I.P

Source : Reg. (EC) No 479/2010 Article 2


150

200

250

300

350

400

450

Jan

Feb

Mar

Apr

May

Jun

Jul

Aug

Sep

Oct

Nov

Dec

EU

R/1

00 k

g

Weekly EU BUTTER Prices

2011 2012 2013



24 September 2014 11 Source: MS’ communications under reg. 479/2010

431

374

355345

334 330319

311 309301 298

290

150

200

250

300

350

400

450

SK LV GB PT ES CZ IE EU Avg. DE BE PL NL

EUR/1

00 kg

EU Butter Prices (up to 14.09.2014)

Source : Reg. (EC) No 479/2010 Article 2

I.P. = 221.75

24 September 2014 12

311

221

140

160

180

200

220

240

260

280

300

320

340

360

380

400

420

440

Jan 03 Jan 04 Jan 05 Jan 06 Jan 07 Jan 08 Jan 09 Jan 10 Jan 11 Jan 12 Jan 13 Jan 14

in E

UR/1

00 k

g

.

EU Quotations of Butter and SMP(EU average based on MS communication and weighted by production)

Butter Intervention buying in price

SMP Intervention buying in price

BUTTER prices

SMP prices

Source: MS’ communications under reg. 562/2005 and 479/2010


140

160

180

200

220

240

260

280

300

320

340

360

380

400

420

440

Jan 0

3

Jan 0

4

Jan 0

5

Jan 0

6

Jan 0

7

Jan 0

8

Jan 0

9

Jan 1

0

Jan 1

1

Jan 1

2

Jan 1

3

Jan 1

4

in E

UR/1

00 k

g

EU Dairy Quotations

(EU Average Prices based on MS communication and weighted by production)

BUTTER

SMP

WMP

CHEDDAR

Source: MS’ communications under reg. 562/2005 and 479/2010


150

200

250

300

350

400

450

Jan

Feb

Mar

Apr

May

Jun

Jul

Aug

Sep

Oct

Nov

Dec

EU

R/1

00 k

g

Weekly EU WMP Prices

2011 2012 2013 2014




Source: MS’ communications under Regs. 562/2005 and 479/2010

150

200

250

300

350

400

450

500

Jan

Feb

Mar

Apr

May

Jun

Jul

Aug

Sep

Oct

Nov

Dec

EU

R/100 k

g

Weekly EU CHEDDAR Prices

2011 2012 2013 2014



150

200

250

300

350

400

450

500

Jan

Feb

Mar

Apr

May

Jun

Jul

Aug

Sep

Oct

Nov

Dec

EU

R/100 k

g

Weekly EU EDAM Prices

2011 2012 2.013 2.014




Source: MS’ communications under Regs. 562/2005 and 479/2010

70

75

80

85

90

95

100

105

110

115

120Ja

n

Feb

Mar

Apr

May

Jun

Jul

Aug

Sep

Oct

Nov

Dec

EU

R/1

00 k

g

Weekly EU WheyPowder Prices

2011 2012 2013 2014




USD/EUR

Source: European Central Bank

US Dollar

1.2845


2.8132.9112.980

1.000

1.500

2.000

2.500

3.000

3.500

4.000

4.500

5.000

5.500

6.000

Jun

07

Sep

07

Dec

07

Ma

r 08

Jun

08

Sep

08

Dec

08

Ma

r 09

Jun

09

Sep

09

Dec

09

Ma

r 10

Jun

10

Sep

10

Dec

10

Ma

r 11

Jun

11

Sep

11

Dec

11

Ma

r 12

Jun

12

Sep

12

Dec

12

Ma

r 13

Jun

13

Sep

13

Dec

13

Ma

r 14

Jun

14

Sep

14

Pric

es in

US

D/t

onne

EU/US/Oceania Quotations of SMP

Avg Oceania SMP quotation

Avg EU SMP internal Price

Avg US SMP quotation

Source: MS’ communications under regs. 562/2005 and 479/2010 & USDA market news


2.850

3.390

4.320

1.000

1.500

2.000

2.500

3.000

3.500

4.000

4.500

5.000

5.500

6.000

Jun

07

Sep

07

Dec

07

Ma

r 08

Jun

08

Sep

08

Dec

08

Ma

r 09

Jun

09

Sep

09

Dec

09

Ma

r 10

Jun

10

Sep

10

Dec

10

Ma

r 11

Jun

11

Sep

11

Dec

11

Ma

r 12

Jun

12

Sep

12

Dec

12

Ma

r 13

Jun

13

Sep

13

Dec

13

Ma

r 14

Jun

14

Sep

14

Pric

es in

US

D/t

onne

EU/US/Oceania Quotations of WMP

Avg Oceania WMP quotation

Avg EU WMP internal Price

Avg US WMP quotation



2.975

4.050

6.660

1.000

1.500

2.000

2.500

3.000

3.500

4.000

4.500

5.000

5.500

6.000

6.500

7.000

Jun

07

Sep

07

Dec

07

Ma

r 08

Jun

08

Sep

08

Dec

08

Ma

r 09

Jun

09

Sep

09

Dec

09

Ma

r 10

Jun

10

Sep

10

Dec

10

Ma

r 11

Jun

11

Sep

11

Dec

11

Ma

r 12

Jun

12

Sep

12

Dec

12

Ma

r 13

Jun

13

Sep

13

Dec

13

Ma

r 14

Jun

14

Sep

14

Pric

es in

US

D/t

onne

EU/US/Oceania Quotations of Butter

Avg Oceania Butter quotation

Avg EU Butter internal Price

Avg US Butter quotation



3.950

4.743

5.310

1.000

1.500

2.000

2.500

3.000

3.500

4.000

4.500

5.000

5.500

6.000

Jun

07

Sep

07

Dec

07

Ma

r 08

Jun

08

Sep

08

Dec

08

Ma

r 09

Jun

09

Sep

09

Dec

09

Ma

r 10

Jun

10

Sep

10

Dec

10

Ma

r 11

Jun

11

Sep

11

Dec

11

Ma

r 12

Jun

12

Sep

12

Dec

12

Ma

r 13

Jun

13

Sep

13

Dec

13

Ma

r 14

Jun

14

Sep

14

Pric

es in

US

D/t

onne

EU/US/Oceania Quotations of Cheddar

Avg OceaniaCheddar quotation

Avg EU Cheddar internal Price

Avg US Cheddar quotation



72 86992 258

266 731

303 176

25 293 24 212

42 06857 283

8 659 7 323

0

50 000

100 000

150 000

200 000

250 000

300 000

350 000

2013 2014

BUTTER & Butteroil Exports

EU-28 (up to Jul)New Zealand (up to Jul)Australia (up to Jul)United States (up to Jul)Argentina (up to Jul)


239 274

382 497

225 113

202 422

63 651 .

91 458 .

317 553 .

360 434 .

9 009 10 820

0

50 000

100 000

150 000

200 000

250 000

300 000

350 000

400 000

450 000

2013 2014

SMP ExportsEU-28 (up to Jul)

New Zealand (up to Jul)

Australia (up to Jul)

United States (up to Jul)

Argentina (up to Jul)


216

897

245

635

706 039 .

843 634 .47

718

48 6

86

18 0

73

36 2

02

84 2

01

81 9

06

0

100 000

200 000

300 000

400 000

500 000

600 000

700 000

800 000

900 000

2013 2014

WMP ExportsEU-28 (up to Jul)

New Zealand (up to Jul)

Australia (up to Jul)


Argentina (up to Jul)


452 931 453 472

172 296158 690

98 9

65

87 8

67

176 830

232 039

27 730 28 050

0

50 000

100 000

150 000

200 000

250 000

300 000

350 000

400 000

450 000

500 000

2013 2014

CHEESE Exports

EU-28 (up to Jul)New Zealand (up to Jul)Australia (up to Jul)United States (up to Jul)Argentina (up to Jul)


EU-28 Exports (1/2) Source : Eurostat (COMEXT)

0

20

40

60

80

100

120

140

160

180

2007 2008 2009 2010 2011 2012 2013

164

118 119126

94102 102

1000 Tonnes

BUTTER exports

0

2

4

6

8

10

12

14


1000 tonnes

Jan-Jul 2014 exports compared to 2013 : + 28%

BUTTER exports

2013

2014

0

100

200

300

400

500

600

2007 2008 2009 2010 2011 2012 2013

200176

229

376

515 520

407

1000 TonnesSMP exports

0

10

20

30

40

50

60

70


1000 tonnes


SMP exports

2013

2014


EU-28 Exports (2/2)

0

100

200

300

400

500

600

700

800

2007 2008 2009 2010 2011 2012 2013

589547 569

667 673

768 787

1000 Tonnes

CHEESE exports

0

100

200

300

400

500

2007 2008 2009 2010 2011 2012 2013

366

483458 445

388 386 374

1000 TonnesWMP exports

54

56

58

60

62

64

66

68

70

72


1000 tonnes


CHEESE exports

20132014

0

5

10

15

20

25

30

35

40

45


1000 tonnes


WMP exports

2013

2014


28 847

37 323

9 8847 524

32 124

41 225

27 722

60 499

28 663

10 917

0

10 000

20 000

30 000

40 000

50 000

60 000

70 000

2013 2014

BUTTER + Butteroil

Imports

EU-28 (up to Jul)


Russia (up to Apr)

China (up to Jul)

Mexico (up to Jun)


2 658578

100 701 100 933

7 510 7 137

103 914

174 670

20 786 23 134

0

20 000

40 000

60 000

80 000

100 000

120 000

140 000

160 000

180 000

200 000

2013 2014

SMP ImportsEU-28 (up to Jul)

Mexico (up to Jun)

Russia (up to Apr)

China (up to Jul)

Japan (up to Jul)


2 318 183549 3 350

340 189

569 743

5 326 3 2717 632 2 904

0

100 000

200 000

300 000

400 000

500 000

600 000

2013 2014

WMP ImportsEU-28 (up to Jul)

Russia (up to Apr)

China (up to Jul)


Mexico (up to Jun)


43 590 50 091

79 57681 857

101 229

95 983

26 972

42 061

138 721131 964

0

20 000

40 000

60 000

80 000

100 000

120 000

140 000

160 000

2013 2014

CHEESE Imports

EU-28 (up to Jul)


Russia (up to Apr)

China (up to Jul)

Japan (up to Jul)


Main Dairy Importers (Butter + Butteroil 1/2)

0

25

50

75

100

125

2007 2008 2009 2010 2011 2012 2013

73 80

5472 73 68

90

1000 Tonnes

Russia

0

2

4

6

8

10

12

14


1000 tonnes

Jan-Apr 2014 compared to 2013 : + 28%

20132014

0

25

50

75

100

125

2007 2008 2009 2010 2011 2012 2013

14 1328 23

3648 52

1000 Tonnes

China

0

2

4

6

8

10

12

14

16


1000 tonnes

Jan-Jul 2014 compared to 2013 : + 118%

2013

2011

2014


Main Dairy Importers (Butter + Butteroil 2/2)

0

25

50

75

100

125

2007 2008 2009 2010 2011 2012 2013

3355 56 52 45 52

1000 Tonnes

Iran

0

25

50

75

100

125

2007 2008 2009 2010 2011 2012 2013

5941

6040

29 3040

1000 Tonnes

Mexico

0

1

2

3

4

5

6

7

8

9

10


1000 tonnesJan-Jul 2014 compared to 2013 : + 3%

2013

2014


0

1

2

3

4

5

6

7

8


1000 tonnes

Jan-Jun 2014 compared to 2013 : - 62%

2013

2014

2014



Main Dairy Importers (S.M.P. - 1/2)

0

50

100

150

200

250

2007 2008 2009 2010 2011 2012 2013

40 5570

89130

168

235

1000 Tonnes

China

0

5

10

15

20

25

30

35

40


1000 tonnes


20132014

0

50

100

150

200

250

2007 2008 2009 2010 2011 2012 2013

121152 165 155

194236

198

1000 Tonnes

Mexico

0

5

10

15

20

25

30

35

40


1000 tonnes

Jan-Jun 2014 compared to 2013 : + 0%

2013

2014



Main Dairy Importers (S.M.P. – 2/2)

0

50

100

150

200

250

2007 2008 2009 2010 2011 2012 2013

91 105 93 98129

112 120

1000 Tonnes

Algeria

0

25

50

75

100

125

150

175

2007 2008 2009 2010 2011 2012 2013

9177

104132 128 136

155

1000 Tonnes

Indonesia

0

5

10

15

20

25


1000 tonnesJan-Apr 2014 compared to 2013 : - 8%

2013

2014

Jan-Apr 2014 compared to 2013 : - 8%

0

5

10

15

20

25

1000 tonnes

Jan-May 2014 compared to 2013 : + 4%

2009

2010

0

50

100

150

200

250

2007 2008 2009 2010 2011 2012 2013

91 77104

132 128 136155

1000 Tonnes

Indonesia

0

2

4

6

8

10

12

14

16

18


1000 tonnes

Jan-May 2014 compared to 2013 : + 4%

2013

2014

2014


Main Dairy Importers (W.M.P. 1/2)

0

100

200

300

400

500

600

700

2007 2008 2009 2010 2011 2012 2013

58 46

177

326 320406

619

1000 Tonnes

China

0

20

40

60

80

100

120

140


1000 tonnes


2013

2014

0

50

100

150

200

250

300

350

2007 2008 2009 2010 2011 2012 2013

160 153200

167204 188

142

1000 Tonnes

Algeria

0

10

20

30

40

50

60


1000 tonnes


2013

2014



Main Dairy Importers (W.M.P. 2/2)

0

50

100

150

200

250

300

350

2007 2008 2009 2010 2011 2012 2013

61 73 74 83 81 7490

1000 Tonnes

Singapore

0

50

100

150

200

250

300

350

2007 2008 2009 2010 2011 2012 2013

110

243215

51106

216170

1000 Tonnes

Venezuela

0

10

20

30

40

50

60


1000 tonnes


2013

2014

0

10

20

30

40

50

60


1000 tonnesJan-Jun 2014 compared to 2013 : + 50%

2013

2013

2014



Main Dairy Importers (Cheese – 1/2)

0

50

100

150

200

250

300

350

2007 2008 2009 2010 2011 2012 2013

234 248 229

294 296 316327

1000 Tonnes

Russia

0

5

10

15

20

25

30

35


1000 tonnes

Jan-Apr 2014 compared to 2013 : - 5%2013

2014

0

50

100

150

200

250

300

350

2007 2008 2009 2010 2011 2012 2013

225187 184 199

215 235 236

1000 Tonnes

Japan

0

5

10

15

20

25

30

35


1000 tonnes

Jan-Jul 2014 compared to 2013 : - 5%

2013

2014


Main Dairy Importers (Cheese – 2/2)

0

50

100

150

200

250

300

350

2007 2008 2009 2010 2011 2012 2013

86 68 73 80 78 89103

1000 Tonnes

Mexico

0

50

100

150

200

250

300

350

2007 2008 2009 2010 2011 2012 2013

200171 162

138 143 154 148

1000 Tonnes

United States

0

5

10

15

20

25


1000 tonnes


2013

2014

0

5

10

15

20

25


1000 tonnes


2013

2014


7.000

7.200

7.400

7.600

7.800

8.000

8.200

Jan

Fe

b

Ma

r

Apr

Ma

y

Jun

Jul

Aug

Sep

Oct

Nov

Dec

in t

on

ne

s

.

Adjusted U.S. milk production (months of constant length)

2011 2012 2013 2014

Source:USDA

Jan-Jul 2014 vs 2013 : + 1.7% (real monthly production)

24 September 2014 41 Source: Dairy Australia

,500

,600

,700

,800

,900

1,000

1,100

1,200

Ju

l

Au

g

Sep

Oc

t

No

v

Dec

Ja

n

Fe

b

Ma

r

Ap

r

Ma

y

Ju

n

in t

on

ne

s

Jul-Jun 2013/14 compared to 2012/13 : - 03%

Australian milk production

2011/12 2012/13 2013/14 2014/15

24 September 2014 42 Source: DCANZ - Fonterra

0

500

1 000

1 500

2 000

2 500

3 000

3 500

4 000

Ju

n

Ju

l

Au

g

Sep

Oct

No

v

Dec

Ja

n

Feb

Mar

Ap

r

May

in t

on

nes

.

Jun-Jun 2014/15 compared to 2013/14 : + 11%

NZ milk production

2011/12 2012/13 2013/14 2014/15


Prices

in US$/t Oct-14 Nov-14 Dec-14 Jan-15 Feb-15 Mar-15

Weighted

average

price % change Oct-14 Nov-14 Dec-14 Jan-15 Feb-15 Mar-15

AMF n.a. 3 234 3 251 3 301 3 313 3 394 3 264 - 2.9% - 2.3% - 3.2% - 2.9% - 3.9% - 4.1%

Butter n.a. 2 645 2 700 2 706 2 895 n.a. 2 698 - 2.0% + 3.1% - 4.1% - 10.1% - 6.2%

BMP n.a. 3 130 3 115 3 265 n.a. n.a. 3 140 - 1.1% + 3.9% - 8.0% - 8.8%

Cheeses n.a. 3 056 3 057 3 122 n.a. n.a. 3 077 - 6.0% - 6.7% - 6.5% - 4.8%

MPC70 n.a. n.a. n.a. n.a. n.a. n.a. n.a.

Rennet Casein n.a. 8 271 8 404 8 435 n.a. n.a. 8 343 + 1.4% + 1.2% + 0.7% + 2.7%

Lactose n.a. n.a. n.a. n.a. n.a. n.a. n.a.

SMP 2 532 2 601 2 660 2 595 2 603 2 828 2 619 + 0.7% - 6.5% + 3.3% + 1.4% - 3.3% - 6.2% - 10.4%

WMP n.a. 2 670 2 696 2 694 2 723 2 873 2 692 + 0.7% + 1.9% + 1.2% - 1.0% - 4.2% - 0.5%

Source : GlobalDairyTrade (http://www.globaldairytrade.info/)

16 Sep 2014 1 € = 1.2929 $ (ECB rate)

in €/t Oct-14 Nov-14 Dec-14 Jan-15 Feb-15 Mar-15

Weighted

average price

AMF 2 501 2 515 2 553 2 562 2 625 2 525

Butter 2 046 2 088 2 093 2 239 2 086

BMP 2 421 2 409 2 525 2 429

Cheese 2 364 2 364 2 414 #VALUE! #VALUE! 2 380

MPC70 #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE!

Rennet Casein 6 397 6 500 6 524 #VALUE! #VALUE! 6 453

Lactose 6 367

SMP 1 958 2 012 2 058 2 007 2 013 2 187 2 026

WMP 2 065 2 085 2 084 2 106 2 222 2 082

% change by contract from previous

auction

Results of the GDT event 124 of 16.09.2014

ANNEX 2

Draft short-term prospects for EU dairy markets

European Commission

1

Draft short-term prospects

for EU dairy markets

Milk market observatory

24 September 2014

Sophie Hélaine

European Commission

2

Outline

• Which market signals are sent to farmers?

• The EU milk collection in the next months?

• 2015 milk collection

• The balance sheets

2

The next STO is to be published the second week of October

With the exception of certain MS, farmers do not face yet a drop in the milk price

3

Note: The farm gate milk price is expressed in real fat content Source: DG AGRI estimates based on MS notifications

4

No break in milk collection expected before the very end of the year

4

5.0% 5.0% 6.4%

7.6%

4.6% 4.7% 4.6% 3.3%

1.3% 0.1%

-0.6% -0.8%

-10%

-5%

0%

5%

10%

15%

20%

25%

30%

35%

9 000

9 500

10 000

10 500

11 000

11 500

12 000

12 500

13 000

13 500

20

14

ch

an

ge

co

w's

milk

de

live

red

('0

00

t)

'14/13

'14/12

2011

2012

2013

2014

2014 forecast

Source: DG AGRI (Work in progress)

5

A bigger break to be expected in the countries which might produce above quota?

5

900

950

1 000

1 050

1 100

1 150

apr

may jun jul

aug

sep

oct

no

v

dec jan

feb

mar

NL

2 200

2 300

2 400

2 500

2 600

2 700

2 800

2 900

apr

may jun jul

aug

sep

oct

no

v

dec jan

feb

mar

DE

11/12

12/13

13/14

14/15

360

380

400

420

440

460

480

apr

may jun jul

aug

sep

oct

no

v

dec jan

feb

mar

DK

100

200

300

400

500

600

700

800

900

apr

may jun jul

aug

sep

oct

no

v

dec jan

feb

mar

IE

Unit: 1000 tonnes Source: Eurostat and DG AGRI forecast from August 2014 (September for NL) (Work in progress)

6

Which magnitude of the decrease further to the embargo?

6

700

750

800

850

900

950

1 000

apr

may jun jul

aug

sep

oct

no

v

dec jan

feb

mar

PL

11/12

12/13

13/14

14/15

40

45

50

55

60

65

70

apr

may jun jul

aug

sep

oct

no

v

dec jan

feb

mar

EE

60

80

100

120

140

160

apr

may jun jul

aug

sep

oct

no

v

dec jan

feb

mar

LT

40

50

60

70

80

90

apr

may jun jul

aug

sep

oct

no

v

dec jan

feb

mar

LV

150

160

170

180

190

200

210

apr

may jun jul

aug

sep

oct

no

v

dec jan

feb

mar

FI

Unit: 1000 tonnes Source: Eurostat and DG AGRI forecast from August 2014 (Work in progress)

7

What about the other Member States?

7

1 500

1 600

1 700

1 800

1 900

2 000

2 100

2 200

2 300

2 400

apr

may jun jul

aug

sep

oct

no

v

dec jan

feb

mar

FR

11/12

12/13

13/14

14/15

400

420

440

460

480

500

520

540

560

apr

may jun jul

aug

sep

oct

no

v

dec jan

feb

mar

ES

700

750

800

850

900

950

apr

may jun jul

aug

sep

oct

no

v

dec jan

feb

mar

IT

800

900

1 000

1 100

1 200

1 300

1 400

1 500

apr

may jun jul

aug

sep

oct

no

v

dec jan

feb

mar

UK

Unit: 1000 tonnes Source: Eurostat and DG AGRI forecast from August 2014 (Work in progress)

8

Milk collection in 2015?

8

3.4%

1.6%

-3%

-2%

-1%

0%

1%

2%

3%

4%

5%

6%

7%

2013/2012 2014/2013 2015/2014

Source: DG AGRI forecast (Work in progress)

9

Which re-direction of exports?

9

2014 EU Exports in 1000 tonnes

Change (1000 t) 2014 – 2013

Change (1000 t) 2015 – 2014

Jan-July known

Aug-Dec forecast

Year forecast

Jan-July

Aug-Dec

Year Jan-July

Aug-Dec

Year

Cheese Total 453 250 703 +1 -84 -84 -98 +130 +32

Russia 130 0 130 -14 -113 -127 -130 +100 -30

Other 323 250 573 +15 +29 +44 +32 +30 +62

Butter Total 94 37 131 +20 -5 +15 -13 +23 +10

Russia 24 0 24 +5 -18 -13 -24 +15 -9

Other 71 37 108 +14 +13 +28 +11 +8 +19

SMP Total 383 185 568 +144 +18 +162 +37 +43 +80

Russia 9 0 9 +1 -13 -12 -9 +10 +1

Other 374 185 559 +144 +30 +174 +46 +33 +79

WMP Total 246 169 415 +29 +12 +41 +7 +2 +9

FDP Total 421 243 664 +70 +16 +87 +10 +57 +67

Russia 35 0 35 +8 -22 -14 -35 +20 -15

Other 386 243 630 +62 +38 +100 +45 +37 +81

Source: Eurostat – Comext for Jan- July and DG AGRI forecast for Aug-Dec (Work in progress)

The use of milk

10

Jan-July* 2014/13

Aug-Dec f 2014/13

2014 f 2014/13 f 2015/14 f

Milk col. (million t) +5.4% +0.7% 146.1 +3.4% +1.6%

CHEESE

Prod. (1000 t) +2.3% +0.7% 9 457 +1.7% +1%

Exports (1000 t) 0% -25% 703 -11% +5%

Dom. Cons.** (kg/cap) 17.4 +2.6% +0.5%

BUTTER

Prod. (1000 t) +2.9% +6.9% 2 222 +4.5% +2%

Exports (1000 t) +26% -11% 131 +13% +8%

Dom. Cons.** (kg/cap) 4.2 +4.6% +1.4%

FRESH DAIRY PRODUCTS

Prod. (1000 t) +0.3% +0.3% 47 186 +0.3% +0.5%

Exports (1000 t) +20% +7% 664 +15% +10%

Dom. Cons.** (kg/cap) 91.3 -0.1% +0.2%

Note: * Jan-July change versus 2013 based on Eurostat figures excluding FR and estimating DK (except for milk) ** Including change in stocks Source: DG AGRI (Work in progress)

The use of milk

11

Jan-July* 2014/13

Aug-Dec 2014/13

2014 2014/13 2015/14

Milk col. (million t) +5.4% +0.7% 146.1 +3.4% +1.6%

SMP

Prod. (1000 t) +20% +15% 1 301 +18% +8%

Exports (1000 t) +60% +11% 568 +40% +14%

Dom. use** (1000 t) 734 +5% +3%

WMP

Prod. (1000 t) +14% +6% 778 +11% +2%

Exports (1000 t) +13% +8% 415 +11% +2%

Dom. use** (1000 t) 364 +10% +3%

Note: * Jan-July change versus 2013 based on Eurostat figures excluding FR and estimating DK (except for milk) ** Including change in stocks Source: DG AGRI (Work in progress)

12

For further information

• STO http://ec.europa.eu/agriculture/markets-and-prices/short-term-outlook/index_en.htm

• MTO http://ec.europa.eu/agriculture/markets-and-prices/medium-term-outlook/index_en.htm

• OECD-FAO Outlook http://www.oecd.org/site/oecd-faoagriculturaloutlook/

http://www.compareyourcountry.org/chart?cr=ch&cr1=mk&lg=en&project=agricultural-outlook&page=1

12

Thank you

http://ec.europa.eu/agriculture/markets-and-prices/short-term-outlook/index_en.htmhttp://ec.europa.eu/agriculture/markets-and-prices/short-term-outlook/index_en.htmhttp://ec.europa.eu/agriculture/markets-and-prices/short-term-outlook/index_en.htmhttp://ec.europa.eu/agriculture/markets-and-prices/short-term-outlook/index_en.htmhttp://ec.europa.eu/agriculture/markets-and-prices/short-term-outlook/index_en.htmhttp://ec.europa.eu/agriculture/markets-and-prices/short-term-outlook/index_en.htmhttp://ec.europa.eu/agriculture/markets-and-prices/short-term-outlook/index_en.htmhttp://ec.europa.eu/agriculture/markets-and-prices/short-term-outlook/index_en.htmhttp://ec.europa.eu/agriculture/markets-and-prices/short-term-outlook/index_en.htmhttp://ec.europa.eu/agriculture/markets-and-prices/medium-term-outlook/index_en.htmhttp://ec.europa.eu/agriculture/markets-and-prices/medium-term-outlook/index_en.htmhttp://ec.europa.eu/agriculture/markets-and-prices/medium-term-outlook/index_en.htmhttp://ec.europa.eu/agriculture/markets-and-prices/medium-term-outlook/index_en.htmhttp://ec.europa.eu/agriculture/markets-and-prices/medium-term-outlook/index_en.htmhttp://ec.europa.eu/agriculture/markets-and-prices/medium-term-outlook/index_en.htmhttp://ec.europa.eu/agriculture/markets-and-prices/medium-term-outlook/index_en.htmhttp://ec.europa.eu/agriculture/markets-and-prices/medium-term-outlook/index_en.htmhttp://ec.europa.eu/agriculture/markets-and-prices/medium-term-outlook/index_en.htmhttp://www.compareyourcountry.org/chart?cr=ch&cr1=mk&lg=en&project=agricultural-outlook&page=1http://www.compareyourcountry.org/chart?cr=ch&cr1=mk&lg=en&project=agricultural-outlook&page=1http://www.compareyourcountry.org/chart?cr=ch&cr1=mk&lg=en&project=agricultural-outlook&page=1http://www.compareyourcountry.org/chart?cr=ch&cr1=mk&lg=en&project=agricultural-outlook&page=1http://www.compareyourcountry.org/chart?cr=ch&cr1=mk&lg=en&project=agricultural-outlook&page=1http://www.compareyourcountry.org/chart?cr=ch&cr1=mk&lg=en&project=agricultural-outlook&page=1http://www.compareyourcountry.org/chart?cr=ch&cr1=mk&lg=en&project=agricultural-outlook&page=1http://www.compareyourcountry.org/chart?cr=ch&cr1=mk&lg=en&project=agricultural-outlook&page=1http://www.compareyourcountry.org/chart?cr=ch&cr1=mk&lg=en&project=agricultural-outlook&page=1http://www.compareyourcountry.org/chart?cr=ch&cr1=mk&lg=en&project=agricultural-outlook&page=1

ANNEX 3

Dairy market update 24 September 2014

COPA-COGECA

Note: This document should not be regarded as an official position of COPA-COGECA but as a factual document.

Dairy market update 24 September 2014

Milk supply

Thanks to good climatic conditions, EU milk production has increased year-on-year (+5.4%, first seven

months)), US (+2.9% in August) and New Zealand (+16%, first seven months)). But if we look back at

the last two years, the production increases have been moderate (New Zealand +1.5%, EU +3.8%).

Milk production increases have become more moderate, but deliveries are still up year-on-year in

Germany (+2.4%), France (+6.2%, ) and UK (+6.9%, August). In the Netherlands, August deliveries

were down -0.3% compared to the same month of 2013. Average milk production increase in the EU

may end around 4% for the calendar year 2014. For next year, a return to the long-term trend of 2%

may be expected (which is the long-term global consumption growth), but with a wide variety of

trends across the EU.

World Market Since April, the market was impacted by the uncertainty about the Chinese imports. However, the EU statistics still show a strong demand from China. This may be related to new Chinese regulations, requiring foreign companies to get consent for importation. The Russian embargo came on top of that. Price levels in the international market are now back to the level of the summer of 2012. Volatility is clearly on the agenda because of deregulation (CAP) and greater market transparency. As we may expect, grassland conditions in the main exporting nations (EU, US, NZ) are good for milk production going forward into 2015. New Zealand

Fonterra has lowered payment forecasts from a record 8.50 NZD per kg of dry matter to 5.60 NZD,

which would be -34%. The last GlobalDairyTrade auction (September 16) showed stability, with no

change to the main GDT index, after many months of declining prices.

At GlobalDairyTrade in September 2013, whole milk powder was sold at prices around 5,100 USD per

tonne but at the same time this year the price was 2,700 USD. This is also the price level that

characterizes the market until March 2015 and has consequences for the futures market. At the

beginning of August future prices may have increased, but the GDT auction results have been used to

close the futures offered by NZX. Therefore the futures market has become very flat at levels just

below 3,000 USD for contracts well into 2015.

USA

In the USA, the stocks were low at the beginning of 2014, and milk production growth was limited. Record milk prices, along with lower feed costs, have resulted in very favourable margins for dairy producers to increase U.S. milk production. In August 2014, the increase was 2.6%, but the average production increase during the first seven months of 2014 was 1.9%. As a result, prices of butter and cheese are well above the world market including EU prices. The average farm milk prices were 27% above the level of 2013. As a result, the US is now much less present on the world market. The current forecast for the 2014 milk price is a record high, but the forecast for 2015 has already been reduced by a third.


The graph below shows that the Chicago futures for Class III milk January 2015 contracts’ market is still firm (USD18.83 per 100 cwt, which is about € 31.4 per 100 kg at 3.5% fat)

European Union We know that the growth of the EU market is limited at best, so production increases need to be

exported. This has also happened as we can take from the statistics published by the European

Commission and milk prices remained at a relative high level.

However, the EU was hit by the Russian boycott on 7 August. Approximately 260,000 tons of cheese

and 40,000 tonnes of butter must now be redirected. This constitutes about 1.5% of the EU milk in

terms of equivalent production. Cheese production has already been reduced in several countries.

Prices paid in markets were below € 3.00 per kg. We need to increase exports so we need to find new

outlets. A question is: will the Russians still consume cheeses and is the international dairy market

after all a ‘zero sum game’? Annual demand growth is estimated at 2.0% per year by FAO/OECD,

which is more than the direct impact of the Russians sanctions on the EU-sector. However, milk

prices are now under pressure.

The impact would have been bigger had the embargo struck in April-May, at our milk production

peak. Also the lower euro-dollar exchange rate of recent weeks has supported EU exports.

At current cheese and butter prices, milk prices would be 30-32 eurocents per kg. For example, the

so-called IFE raw material value based on butter and skimmed milk powder quotations in the EU in

August was down to 32.4 cents per kg (4% fat).

The latest market information shows that the prices for fresh dairy have increased somewhat from

the late lows, with cream and skimmed milk concentrates on the up. However, young cheese is sold

at prices as low as € 2.75 per kg.

The European Union has responded well to the Russian boycott with private storage support for

SMP, butter and cheeses. Even where the effect in volumes seems limited, this may have helped to

stabilise markets and we now seem to have reached the bottom in the global and European market.

However, the Commission has repealed the private storage scheme for cheeses on 22 September.


This may cause new uncertainty in the market. Many operators are still looking for ways to cope with

the effects of the Russian boycott.

Milk prices

The LTO International Milk Prices Comparison shows an average milk prices per standard milk (4.2% fat) of 38.65 euro per 100 kg for July 2014 (see graph below).

Graph: the average paid milk price per kg standard milk (4.2%) of July 2014 was € 0.66 above the same month of 2013. But then the trend was up, now the trend is down. Source: LTO Milkprices.

The table below provides some information about recent milk price developments, taken from LTO

Milkprices.

Most recent milk price change (eurocent)

Aug Sept Oct 2014 Cumulative

Milcobel -1,0 -6,0 including August

Alois Müller, Leppersdorf

-1,0 -4,5 including August

DMK 0 -3,0 including August

Arla Foods DK -1,2 -1,5 -4,6 including September

Hämeenlinnan O.

Bongrain (Basse Normandie)

Danone (Pas de Calais)

Lactalis (Pays de la Loire)

Sodiaal Union

Dairy Crest (Davidstow) -1.1 ppl -1,75ppl -2.85 ppl Including October

First Milk (compositional)

-1.25ppl -0.5 ppl -3.0 ppl -5.9 ppl Including October. Since April, price drop was 7.4 ppl

Glanbia -2 -6 Including August


Kerry Agribusiness

Granarolo (North) -2 0 0 -0,25

DOC Cheese 0 -3,5 -11 including September

Royal FrieslandCampina 0,25 -1,75 -6 including September

USA Class III in US$/cwt average Class III price January-August 2014: 27% higher than in 2013

Fonterra Cash pay-out (milk price + dividend), 2013/14: 8,50, 2014/15: 5,60 (-34%)

From this table, the following conclusions may be drawn:

- The average 2014 advance payments by Glanbia, Kerry and Milcobel will be below the

average level of 2013, even if their payments would stay level for the rest of this year.

- If the milk price of October, November and December is 1 eurocent per kg below the level in

the same month of 2013, then Alois Müller’s payments (Leppersdorf) will also end below the

2013 average

- We expect the average 2014 payments of the other dairies in the comparison to be above

the average of 2013 because of the relatively high milk prices of the beginning of 2014. The

weaker euro is also helpful for the dairies in the Eurozone.

- For Granarolo (Italy), the average 2014 milk price will be € 2 per kg above the average of

2013, thanks to a contract.

- For the French dairies, it is a bit more difficult to make predictions, but also in France the

average 2014 milk prices will be above the 2013 level. In the first half of 2014, the prices

level was 4-5 eurocent per kg higher than in 2013

- In Great Britain, the official July price was 32.41 ppl. For the UK, the average was 31.79 ppl.

Arla dropped the milk prices 4,68ppl (liquid) from April to October. Muller Wiseman Dairies

Milk Group dropped the price 3.50 ppl between April and October. Significant price cuts

have been announced by milk buyers which are not reflected in these prices.

- It is interesting to note the rising milk prices in the USA, while Fonterra is lowering it’s

forecast considerably (-34%).

In Baltic States, at the moment, prices range from 18-23.5 €/100 kg, 30-40% drop compared to the

beginning of the year. There is still downward pressure.

For Lithuania, below some examples of prices paid to coops/farmers (from contracts):

Period Price of raw milk, without VAT, LTL/t (with/without transport)

Receiver (farmer/coop.)

Company A to cooperative

2013.08.01-31 1120/1090 Cooperative

2013.09.01-30 1180/1150 Cooperative

2013.10.01-31 1210/1180 Cooperative

2013.11.01-30 1160/1130 Cooperative

2013.12.01-31 1180/1150 Cooperative

2014.01.01-31 1180/1150 Cooperative

2014.02.01-28 1230/1200 Cooperative

2014.03.01-31 1170/1140 Cooperative


2014.04.01-30 1030/1000 Cooperative

2014.05.01-31 860/830 Cooperative

2014.06.01-30 830/800 Cooperative

2014.07.01-31 860/830 Cooperative

2014.08.01-31 870/840 Cooperative

2014.09.01-30 695/665 Cooperative

Comparing 2013.09 with 2014.09, the price dropped down by 41 proc.

Company B to cooperative

2013.08.01-31 1130/1090 Cooperative

2013.09.01-30 1190/1150 Cooperative

2013.10.01-31 1230/1190 Cooperative

2013.11.01-30 1200/1160 Cooperative

2013.12.01-31 1195/1155 Cooperative

2014.01.01-31 1210/1170 Cooperative

2014.02.01-28 1240/1200 Cooperative

2014.03.01-31 1180/1140 Cooperative

2014.04.01-30 1080/1040 Cooperative

2014.05.01-31 1040 (for the first 500 t)/1000 (870/830 for the next volumes)

Cooperative

2014.06.01-30 850/810 Cooperative

2014.07.01-31 880/840 Cooperative

2014.08.01-31 890/850 Cooperative

2014.09.01-30 740/700 Cooperative


Cooperative to farmer

2014.01.01-30 1060 Farmer

2014.02.01-15 1130 Farmer

2014.02.16-28 1110 Farmer

2014.03.01-31 1130 Farmer

2014.04.01-15 1130 Farmer

2014.04.16-30 1070 Farmer

2014.05.01-15 990 Farmer

2014.05.16-31 860 Farmer

2014.06.01-15 860 Farmer

2014.06.16-30 840 Farmer

2014.07.01-15 890 Farmer

2014.07.16-31 870 Farmer

2014.08.01-31 870 Farmer


Company C to cooperative

2013.12.01-2014.01.31

1175 Cooperative

2014.02.01-28 1220 Cooperative

2014.03.01-31 1190 Cooperative

2014.04.01-30 1020 Cooperative

2014.05.01-31 830 Cooperative

2014.06.01-30 810 Cooperative

2014.07.01-31 880 Cooperative

2014.08.01-31 860 Cooperative



Company D to cooperative

2014.01.01-31 1250 Cooperative

2014.02.01-28 1260 Cooperative

2014.03.01-31 1250 Cooperative

2014.05.01-31 850 Cooperative

2014.06.01-30 830 Cooperative

2014.07.01-31 870 Cooperative

2014.08.01-31 910 Cooperative

2014.09.01-30 660 Cooperative


Company E to cooperative

2014.04.16 (atbuline data,

informacija gauta 04.28)

870/820 Cooperative

2014.08.15 780/730 Cooperative

Company F to cooperative

2014.08.01-31 920 Cooperative

2014.09.01-30 670 Cooperative

Company G to cooperative

2014.08.01-15 910 Cooperative

2014.08.16-31 810 Cooperative

2014.09.01-30 660 Cooperative

Company H to cooperative

2014.01.01-30 1090 Cooperative

2014.02.01-28 1110 Cooperative

2014.03.01-31 1110 Cooperative

2014.04.01-30 970 Cooperative

2014.05.01-15 880 Cooperative

2014.05.16-31 900 Cooperative

2014.06.01-31 840 Cooperative

2014.07.01-15 840 Cooperative

2014.07.16-31 860 Cooperative

2014.08.01-15 770 Cooperative

2014.08.16-31 670 Cooperative


In Hungary, the price of raw milk moves around 30-32 €/100 kg. After contracts finish in October 2014,

significant price drops are expected.

Feed prices

There is a lot of pressure on the price for feed ingredients in the world market. The US expects record

harvests for soyabean and wheat in 2014. In northwest Europe, quotations for wheat are

approaching € 1.50 per kg. The global grain and oilseed markets moved down further again last week

after the latest USDA world supply and demand estimates were revealed. While expectations are for

further increases to both global supply and demand, the level of demand is not large enough to


offset the record crops. Consequently, end-season stock projections were increased for wheat, maize

and soybeans and prices have declined in response. This may indicate much lower concentrate prices

for dairy towards the end of 2014. This added to the reasonable weather conditions in many regions

(early spring, recent rain fall in parts of Europe, including Brussels) may help dairy farmers to reduce

costs of production this year and the first months of 2015.

Conclusions

- Certain member states are struggling with the effects of the Russian boycott and this is

impacting on the whole of the internal European market

- Milk prices are under pressure

- The European Union has responded well with private storage support for SMP, butter and

cheeses.

- Even where the effect in volumes seems limited, this may have helped to stabilise markets

and we now seem to have reached the bottom in the global and European market.

- The situation in the US is very different from ours, with prices for cheeses and butter

reaching record levels. The US is now much less competitive on the world market. For how

long this will last, we don’t know. US milk production was up 2.6% in August year-on-year,

which is more than earlier this year.

- However, the Commission has repealed the private storage scheme for cheeses on 22

September. This may cause new uncertainty in the market. Many operators are still looking

for ways to cope with the effects of the Russian boycott.

- Because of the low milk prices in H1 2013 and much higher milk prices in H1 2014, we expect

average 2014 EU milk prices still to be above the average of 2013 for most dairies. But the

market trend is now downwards, and the situation in 2015 will be very different from the

start!

- falling feed prices will not be enough to compensate farmers for lower milk prices

Copa-Cogeca delegation to the Milk Market Observatory meeting

ANNEX 4

EU dairy products monthly stock situation

EDA

EU dairy products monthly stock situation

Milk Market Observatory

Economic Board

Sept 24th, 2014

Gérard CALBRIX

Director Economic Affairs

ATLA

Methodology

• For each dairy product, these stock estimates are based on the equation: – Stock variation = EU production + EU import – EU internal consumption – EU exports

• ZMB balance sheets and forecasts have been used as references for : – End of year stocks levels in 2012 and 2013

– Yearly consumption levels in 2012, 2013 and 2014 forecast

• Monthly production statistics are based on ZMB Dairy World publications.

• Exports and imports figures are based on MMO website figures.

• The initial stocks entered in the model for end of 2011 are : – SMP: 152 000 t

– Butter: 80 000 t

– Cheese: 200 000 t (arbitrary basis)

• The qualification of stock levels (green, orange or red) is based on the EDA analysts’ personal views and past market observation.

ANNEX 5

Perspectives from the Dairy Trade

Eucolait

Perspectives from the Dairy

Trade

Milk Market Observatory Meeting

24 September 2014

Outline

• Global Supply

• Global Exports

• Global Demand

• Global Stocks

• Conclusions

Global Supply

-1000 0 1000 2000 3000 4000 5000 6000 7000 8000 9000

Combined evolution

USA

EU

Australia

New Zealand

Uruguay

Argentina

Comparing milk production in 2014 with 2013 January - September (with partial extrapolation for Q3 - 2014 data)

000 tonnes

2% GROWTH RATE

Global Supply

-500 0 500 1000 1500 2000 2500 3000

EU exports to Russia in milk equiv.

Combined evolution

USA

EU

Australia

New Zealand

Uruguay

Argentina

Comparing 2014 milk production with 2013 for the major dairy exporting countries

Q3 (extrapolated from most recent data) Q2 Q1

2% GROWTH RATE

000 tonnes

-6,9% in Q3

- 5,7% in Q3

+ 6,3 % in Q3

+ 1,5 % in Q3

+4,1 % in Q3

+ 3,5 % in Q3

+ 3,5 % in Q3

Global Supply

• Oversupply in key producing regions persists

• Somewhat slower combined growth expected in Q3 versus the first half of the year, US being the exception

• Russian ban has potential to worsen global oversupply.

EU Supply

• EU production was up 5% during first half of 2014

• Conditions remain favourable: high milk prices (lagging market reality), lower feed prices, low energy costs and favourable weather

• No signs of lower milk production

US Supply

• Milk production year to date:

– June 2014: +2,2% versus June 2013

– July 2014: + 3,9% versus July 2013

– August 2014: +2,5% versus August 2013

• Outlook for rest of 2014

– September growth likely to be similar to July’s

– Production conditions remain very favourable

– Domestic consumption appears to have been growing at a pace well above 1% per year.

New Zealand supply

• Milk Production

– DCANZ has reported until June

• April-June 2014 is up 29% from April-June 2013 (but down 10% from April-June 2012)

• 2013-14 season: +9%

– Outlook for new season

• Growth rate appears to be slowing down Fonterra collection in July + 8,3% and in August + 5 %

• Fonterra forecast for 2014/15 season revised down to + 2% due to effect of lower milk price

Australia supply

• Milk Production

– 2013/14 season finished on par with 2012/13 after strong second half

– July 2014 production: +1,5% versus July 2013

• Outlook

– Q3 growth expected to be in line with July’s

– 2014/2015 season + 1 to 3% (9,3-9,5 billion litres)

Argentina

• Milk Production

– After promising start beginning of 2014 milk production started lagging behind 2013 figures

• May 2014 is down 7,3% from May 2013

• June 2014 is down 8,4% from June 2013

• Outlook

– No immediate improvement expected, bad weather conditions (floods)

Uruguay Supply

• Milk Production

– May 2014 production down 0,7% from 2013

– June 2014 estimate down 6,1% from 2013

– July 2014 estimate down 5,7% from 2013

• Outlook

– No immediate improvement expected

Global Exports

0

50000

100000

150000

200000

250000MONTHLY EXPORTS (EU+USA+NZ+AUS+ARG+URU)

SMP WMP WHEY CHEESE

BUTTER Linear (SMP) Linear (WMP) Linear (WHEY)

Met

ric

Ton

ne

s

Global Exports

• Most products performing below trend line

– technical correction due to price development notably in China

• Global exports have potential to increase as global demand is there

EU Exports

0

20

40

60

80

100

120

140

3 MONTH ROLLING AVERAGE, Index Q1-2014=100

SMP (100 = 48 775 MT) WMP (100 = 33 747 MT) CHEESE (100 = 62 474 MT)

WHEY (100 = 42 124 MT) LACTOSE (100 = 14 196 MT) BUTTER (100 = 9 732 MT)

EU Exports

• Very good first half of 2014 with gains for most products (in comparison to first half of 2013)

• Especially milk powders and butter doing well

• Cheese and whey exports up in July, mainly to Russia

• No post Russia ban data available yet

US Exports

0

20

40

60

80

100

120

140

3 MONTH ROLLING AVERAGE (INDEX Q1 2014 = 100)

SMP (100 = 44 596 MT) WMP (100 = 3 290 MT) WHEY (100 = 39 840 MT) CHEESE (100 = 33 279 MT) BUTTER (100 = 8 889 MT)

NZ Exports

0

20

40

60

80

100

120

140

160

03/2013 04/2013 05/2013 06/2013 07/2013 08/2013 09/2013 10/2013 11/2013 12/2013 01/2014 02/2014 03/2014 04/2014 05/2014 06/2014 07/2014

3 MONTH ROLLING AVERAGE (Index Q1 -2014 = 100)

WMP (100 = 146 476 MT) SMP (100 = 30 109 MT) BUTTER (100 = 31 975 MT)

AMF (100 = 17 163 MT) CHEESE (100 = 24 639 MT)

Australia Exports

0.0

20.0

40.0

60.0

80.0

100.0

120.0

140.0

160.0

3 MONTH ROLLING AVERAGE (Index Q1- 2014 = 100)

SMP (100 = 15 325 MT) WMP (100 = 8 646 MT) BUTTER (100 = 3 532 MT) CHEESE (100 = 11 946 MT) WHEY (100 = 2 366 MT)

Argentina Exports

0

20

40

60

80

100

120

140

160

180

200

3 MONTH ROLLING AVERAGE (Q1 2014 = 100)

SMP (100 = 1 785 MT) WMP (100 = 12 792 MT) WHEY (100 = 5 038 MT) CHEESE (100 = 4 737 MT) BUTTER (100 = 1049 MT)

Uruguay Exports

0

50

100

150

200

250

300

3 MONTH ROLLING AVERAGE (INDEX Q1 2014 = 100)

WMP (100 = 7 349 MT) SMP (100 = 1 342 MT) CHEESE (100 = 3 540 MT) BUTTER (100 = 1 214 MT)

China Imports

0

20

40

60

80

100

120

140

160

3 MONTH ROLLING AVERAGE (Index Q1-2014 = 100)

WMP (100 = 110 215 MT) SMP (100 = 30 027 MT) WHEY (100 = 29 386 MT) LACTOSE (100 = 6 441 MT)

CHEESE (100 = 5 977 MT) BUTTER (100 = 7 091 MT) AMF (100 = 3 682 MT) CASEIN(ATES) (100 = 1 274 MT)

Indonesia Imports

0

50

100

150

200

250

3 MONTH ROLLING AVERAGE (Index Q1-2014 = 100)

SMP (100 = 12 691 MT) WMP (100 = 2962 MT) WHEY (100 = 6604 MT) LACTOSE (100 = 1709 MT)

CHEESE (100 = 1247 MT) AMF (100 = 535 MT) BUTTER (100 = 742 MT)

Philippines Imports

0

20

40

60

80

100

120

140

160

180

3 MONTH ROLLING AVERAGE (INDEX Q1-2014 = 100)

SMP (100 = 9 662 MT) WMP (100 = 1 956 MT) WHEY (100 = 4 050 MT)

CHEESE (100 = 932 MT) AMF (100 = 1 114 MT) LACTOSE (100 = 1030 MT)

Mexico Imports

0

20

40

60

80

100

120

140


SMP (100 = 14 716 MT) CHEESE (100 = 8 394 MT) WHEY (100 = 4 418 MT)

LACTOSE (100 = 2 665 MT) CASEIN(ATES) (100 = 1 388 MT)

Algeria Imports

0

50

100

150

200

250


WMP (100 = 12 445 MT) SMP (100 = 7 969 MT) CHEESE (100 = 1427 MT) BUTTER (100 = 420 MT)

Russia Imports

0

50

100

150

200

250

COMBINED EXPORTS TO RUSSIA (EU+NZ+USA+ARG+URU+AUS) 3 MONTH ROLLING AVERAGE (Index Q1-2014 = 100)

CHEESE (100 = 21 975 MT) BUTTER (100 = 9 156 MT) SMP (100 = 1 882 MT) WMP (100 = 1 029 MT)

WHEY (100 =2 767 MT) DAIRY SPREADS (100 =798 MT) AMF (100 = 1 390 MT)

Global Stocks

We hear:

• Stocks have increased in most regions following high milk production

• In EU, especially SMP, butter and cheese stocks appear to be significantly higher than in Q3/2013, less so for whey and WMP

• US: in particular SMP stocks have increased

• Oceania: higher for most products, in particular WMP

• South America: little changes

Conclusions

• Global demand is good

• Current imbalance is supply driven

• Direction of the market uncertain

• Supply reaction to lower prices is needed

Thank You

Eucolait

www.eucolait.eu

@Eucolait

• Sources used in presentation: GTIS, USDA, Dairy Australia, Fonterra DCANZ, Inale
http://www.eucolait.eu/

last update : 29.09...2014/09/24 · milk supply chain: ceja (young farmers), copa-cogeca...

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