mmo economic board › ... › mmo-report-2014-07-24_en.pdf · 7/24/2014 · jan feb mar apr may...

o The 2nd meeting of the Milk Market Observatory

economic board took place on 24 July 2014, gathering market experts of the 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, and 1 presentation by CNIEL

on dairy investments in Europe1. The floor was

then open to market experts.

o Downward pressure has been increasing on milk prices since March because of higher supply in the main producing regions (EU, US, NZ). After the seasonal production peak in May, dairy commodity

and spot milk prices started recovering. As usual, a time lag is expected before farm gate milk prices follow suit.

o Availability and quality of maize and grass is good and feed prices are decreasing in the wake of a good cereals harvest.

o Milk collection is 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.

o Household consumption is at best stagnating (except for butter and cream used for home cooking), while industrial customers (buying dairy ingredients to manufacture processed food) and

third country buyers are not expected to be

dynamic on the demand front until September.

o The butter market is considered as relatively balanced with stable prices and limited activity. The cheese market is depicted as undergoing a strong recovery. A possible El Niño weather event

is predicted by some forecasters but yet to be confirmed would impact world milk production.

1

See presentations in annex

o An assessment of stock levels was presented

based on a residual approach (production + imports – consumption and exports). SMP stocks

appeared to have been in a healthy state since the 2nd half of 2012 but showing a trend towards oversupply from April 2014, probably pursued in May but with a change in trend expected from June/July.

o It is thought that butter stocks have experienced a similar curve after oversupply in the first half of 2012, but, unlike for SMP, stocks are assessed as being at normal levels in last month of observation (April 2014).

o Cheese stocks (Gouda type) are assessed at

slightly above normal levels in April 2014, but still very far from the oversupply observed in the first half of 2012.

o Russian imports have been rather stable with

regard to cheese up to now and have been increasing for butter. Algerian imports have increased for SMP and WMP. Demand from

Indonesia, Malaysia, the Philippines, Singapore, etc. appears to be steady with a long term perspective.

o World stocks appear to have increased at the end of the 2nd quarter of 2014 in the main milk supplying regions and uncommitted stocks are reported in some importing regions.

o Demand is expected to rebound once buyers have the perception that the floor has been hit.

o From 2012 to June 2014, dairy investments in Europe have been reported for a total of 5.5 billion € covering 190 investment projects involving 120

companies. Not only EU companies are investing in

Europe, but also Chinese and NZ companies, showing the attractiveness of sourcing milk from the EU. Contrary to the past where investments in the EU mainly targeted cheese production, the majority of new projects are in the area of dry dairy products.

– -

Last update : 29.07.2014

Milk Market Observatory REP.Meb

MMO Economic Board

Meeting of 24 July 2014

ANNEX 1

Milk Market Situation

European Commission

Milk Market Situation

Brussels, 24 July 2014

24 July 2014 2

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

EU Productions

Total Butter+ 1.2%

Skimmed-milk powder+ 17.6%

Milk powder cream, Whole milk powder

and partly skimmed milk

powder+ 13.2%

Cheese+ 2.5%

Fermented milk- 2.7%

Cows' Milk Collected

+ 5.6%

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

Evo

luti

on

in

%

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

Source : MS' Communications to EurostatRem : Apri l missing for DK, FR in some products

Total Butter- 2.2%

Skimmed-milk powder+ 23.3%

Milk powder cream, Whole milk powder

and partly skimmed milk

powder+ 18.8%

Cheese+ 3.1%

Fermented milk- 2.0%

Cows' Milk Collected

+ 6.5%

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

Evo

luti

on

in

%

EU-28 Deliveries/Productions development

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

Source : MS' Communications to EurostatRem : Apri l missing for DK, FR in some products

24 July 2014 3

-16.0% to -12.0%

-12.0% to -8.0%

-8.0% to -4.0%

-4.0% to +0.0%

+0.0% to +4.0%

+4.0% to +8.0%

+8.0% to +12.0%

+12.0% to +16.0%

n/a

+1.6

-1.3

+4.1

+4.2

+9.0

+9.3

-5.8-0.6

+7.8

+3.0

+6.8

+12.2

+6.9

+5.4

+2.9

+5.1

+2.5

+7.2

+4.0

+14.2+1.5

+0.2

+3.7

+2.7

+13.0

Source : MS' Communications to Eurostat

+3.1

Data for April 2014 not available for France

24 July 2014 4

-24.0% to -18.0%

-18.0% to -12.0%

-12.0% to -6.0%

-6.0% to +0.0%

+0.0% to +6.0%

+6.0% to +12.0%

+12.0% to +18.0%

+18.0% to +24.0%

n/a

+7.4

+0.9

+4.5

+3.7

+9.3

+22.

-7.5+0.3

+4.0

+10.6

+12.

+7.5

+7.6

+6.6

+6.7

-5.4

+7.0

+6.0

+18.+3.3

+1.5

+3.1

+2.6

+15.0

Source : MS' Communications to Eurostat

+8.5

Data for April 2014 not available for France

24 July 2014 5 Source: MS’ communications to Eurostat

10000

10500

11000

11500

12000

12500

13000

13500

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-Apr

Jan-Apr 2014/13 : +5.8%

Source : Estat - Newcronos

April 2014 deliveries estimated for France

24 July 2014 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 May 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 July 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

55.9

46.1

45.7

43.0

42.7

42.0

41.6

40.9

39.6

39.6

38.9

38.8

38.7

38.0

37.8

37.1

36.3

35.6

35.4

35.4

34.9

34.5

34.4

34.2

34.1

32.9

31.8

29.9

27.7

0

5

10

15

20

25

30

35

40

45

50

55

60

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

( May 2014 vs May 2013 )

Estimates for DK, IT, SE

24 July 2014 8

40

60

80

100

120

140

160

Q1 Q2 Q3 Q4

Index 2007 = 100

Gross margin

2012 2013 2014

50

60

70

80

90

100

110

120

130

140

150

2012-Q2 2012-Q3 2012-Q4 2013-Q1 2013-Q2 2013-Q3 2013-Q4 2014-Q1

Index 2007 = 100

EU-27 Milk price, operating costs and margin per tonne

Operating costs

Milk price only

Gross margin current situation

+ 21%

+ 15%

- 19%

+ 8%

+ 9%

+ 13%

+ 5%

2012 2013

24 July 2014 9

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 2014 IP 2009

Latest price : 290 EUR/100kg

Evolution compared to same period last year : -7%

24 July 2014 10

Source: MS’ communications under reg. 479/2010

305

293 291 290

278 278274

269 267

150

170

190

210

230

250

270

290

310

330

350

GB DE BE EU Avg. PL IE LV CZ SK

in E

UR/1

00 kg

EU S.M.P. Prices (up to 13.07.2014)

I.P

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

24 July 2014 11


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 2014 IP 2009



24 July 2014 12 Source: MS’ communications under reg. 479/2010

437

374

354 353 352 350 349 346 344 342

324 324

150

200

250

300

350

400

450

500

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

EUR/1

00 kg

EU Butter Prices (up to 13.07.2014)

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

I.P. = 221.75

24 July 2014 13

354

290

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 SMP

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

24 July 2014 14

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

24 July 2014 15 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 WMP Prices

2011 2012 2013 2014



24 July 2014 16


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

Evolution compared to same period last year : +4%


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



24 July 2014 17


70

75

80

85

90

95

100

105

110

115

120Ja

n

Feb

Mar

Apr

May

Jun

Jul

Aug

Sep

Oct

Nov

Dec

EUR/1

00 kg

Weekly EU WheyPowder Prices

2011 2012 2013 2014



24 July 2014 18

USD/EUR

Source: European Central Bank

US Dollar

1.3481

24 July 2014 19

3 713

3 9383 800

1 000

1 500

2 000

2 500

3 000

3 500

4 000

4 500

5 000

5 500

6 000A

pr

07

Jul 07

Oct 0

7

Jan 0

8

Apr

08

Jul 08

Oct 0

8

Jan 0

9

Apr

09

Jul 09

Oct 0

9

Jan 1

0

Apr

10

Jul 10

Oct 1

0

Jan 1

1

Apr

11

Jul 11

Oct 1

1

Jan 1

2

Apr

12

Jul 12

Oct 1

2

Jan 1

3

Apr

13

Jul 13

Oct 1

3

Jan 1

4

Apr

14

Jul 14

Prices in U

SD

/tonne

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

24 July 2014 20

3 500

4 3894 460

1 000

1 500

2 000

2 500

3 000

3 500

4 000

4 500

5 000

5 500

6 000A

pr

07

Jul 07

Oct 0

7

Jan 0

8

Apr

08

Jul 08

Oct 0

8

Jan 0

9

Apr

09

Jul 09

Oct 0

9

Jan 1

0

Apr

10

Jul 10

Oct 1

0

Jan 1

1

Apr

11

Jul 11

Oct 1

1

Jan 1

2

Apr

12

Jul 12

Oct 1

2

Jan 1

3

Apr

13

Jul 13

Oct 1

3

Jan 1

4

Apr

14

Jul 14

Prices in U

SD

/tonne

EU/US/Oceania Quotations of WMP

Avg Oceania WMP quotation

Avg EU WMP internal Price

Avg US WMP quotation


24 July 2014 21

3 600

4 812

5 330

1 000

1 500

2 000

2 500

3 000

3 500

4 000

4 500

5 000

5 500

6 000A

pr

07

Jul 07

Oct 0

7

Jan 0

8

Apr

08

Jul 08

Oct 0

8

Jan 0

9

Apr

09

Jul 09

Oct 0

9

Jan 1

0

Apr

10

Jul 10

Oct 1

0

Jan 1

1

Apr

11

Jul 11

Oct 1

1

Jan 1

2

Apr

12

Jul 12

Oct 1

2

Jan 1

3

Apr

13

Jul 13

Oct 1

3

Jan 1

4

Apr

14

Jul 14

Prices in U

SD

/tonne

EU/US/Oceania Quotations of Butter

Avg Oceania Butter quotation

Avg EU Butter internal Price

Avg US Butter quotation


24 July 2014 22

4 475

5 192

4 430

1 000

1 500

2 000

2 500

3 000

3 500

4 000

4 500

5 000

5 500

6 000A

pr

07

Jul 07

Oct 0

7

Jan 0

8

Apr

08

Jul 08

Oct 0

8

Jan 0

9

Apr

09

Jul 09

Oct 0

9

Jan 1

0

Apr

10

Jul 10

Oct 1

0

Jan 1

1

Apr

11

Jul 11

Oct 1

1

Jan 1

2

Apr

12

Jul 12

Oct 1

2

Jan 1

3

Apr

13

Jul 13

Oct 1

3

Jan 1

4

Apr

14

Jul 14

Prices in U

SD

/tonne

EU/US/Oceania Quotations of Cheddar

Avg OceaniaCheddar quotation

Avg EU Cheddar internal Price

Avg US Cheddar quotation


24 July 2014 23

54 63566 531

199 206

232 501

18 977 18 187

25 551 46 055

6 340 5 200

0

50 000

100 000

150 000

200 000

250 000

2013 2014

BUTTER & Butteroil Exports

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

24 July 2014 24

169 577

272 130

179 410

141 802

50 931 .

67 795 .

217 591 .

247 431 .

4 689 7 005

0

50 000

100 000

150 000

200 000

250 000

300 000

2013 2014

SMP ExportsEU-28 (up to May)

New Zealand (up to May)

Australia (up to May)

United States (up to May)

Argentina (up to May)

24 July 2014 25

144

929

180

170

583 252 .

656 451 .36

333

38 3

69

10 5

37

25 0

76

54 4

89

61 5

62

0

100 000

200 000

300 000

400 000

500 000

600 000

700 000

2013 2014

WMP ExportsEU-28 (up to May)

New Zealand (up to May)

Australia (up to May)


Argentina (up to May)

24 July 2014 26

324 905 319 179

130 379118 149

68 9

41

61 6

08

123 587

165 666

20 177 20 650

0

50 000

100 000

150 000

200 000

250 000

300 000

350 000

2013 2014

CHEESE Exports

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

24 July 2014 27

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-May 2014 exports compared to 2013 : + 23%

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

24 July 2014 28

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

Jan-May 2014 exports compared to 2013 : - 2%

CHEESE exports

2013

2014

0

5

10

15

20

25

30

35

40

45


1000 tonnes


WMP exports

2013

2014

24 July 2014 29

23 181

32 731

7 6044 455

32 124

41 225

20 986

46 502

22 677

7 557

0

10 000

20 000

30 000

40 000

50 000

60 000

2013 2014

BUTTER + Butteroil Imports

EU-28 (up to May)


Russia (up to Apr)

China (up to May)

Mexico (up to Apr)

24 July 2014 30

1 373375

64 30359 562

7 510 7 137

69 571

131 275

15 403 14 078

0

20 000

40 000

60 000

80 000

100 000

120 000

140 000

2013 2014

SMP ImportsEU-28 (up to May)

Mexico (up to Apr)

Russia (up to Apr)

China (up to May)

Japan (up to May)

24 July 2014 31

1 523 103549 3 350

286 669

486 931

4 286 2 5565 021 1 852

0

100 000

200 000

300 000

400 000

500 000

600 000

2013 2014

WMP ImportsEU-28 (up to May)

Russia (up to Apr)

China (up to May)


Mexico (up to Apr)

24 July 2014 32

32 07240 221

55 912 55 196

101 229

95 983

19 317

30 399

101 389

93 722

0

20 000

40 000

60 000

80 000

100 000

120 000

2013 2014

CHEESE Imports

EU-28 (up to May)


Russia (up to Apr)

China (up to May)

Japan (up to May)

24 July 2014 33

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-May 2014 compared to 2013 : + 122%

2013

2011

2014

24 July 2014 34

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-May 2014 compared to 2013 : - 3%

2013

2014

Jan-May 2014 compared to 2013 : - 3%

0

1

2

3

4

5

6

7

8


1000 tonnes

Jan-Apr 2014 compared to 2013 : - 67%

2013

2014

2014


24 July 2014 35

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

0

50

100

150

200

250

2007 2008 2009 2010 2011 2012 2013

40 55 7089

130168

235

1000 Tonnes

China

0

5

10

15

20

25

30

35

40


1000 tonnes


2013

2014

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


2013

2014


24 July 2014 36

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


0

5

10

15

20

25

1000 tonnes

Jan-Mar 2014 compared to 2013 : + 5%

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


2013

2014

2014

24 July 2014 37

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


20132014

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


24 July 2014 38

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 74 90

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

Jan-May 2014 compared to 2013 : - 22%

2013

2014

0

10

20

30

40

50

60


1000 tonnesJan-Mar 2014 compared to 2013 : + 158%

2013

2013

2014


24 July 2014 39

Main Dairy Importers (Cheese – 1/2)

0

50

100

150

200

250

300

350

2007 2008 2009 2010 2011 2012 2013

234 248 229

294 296 316 327

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


2013

2014

24 July 2014 40

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 89 103

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

24 July 2014 41

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-May 2014 vs 2013 : + 1,1% (real monthly production)

24 July 2014 42 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-May 2013/14 compared to 2012/13 : - 0,2%

Australian milk production

2010/11 2011/12 2012/13 2013/14

24 July 2014 43 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

Oc

t

No

v

Dec

Ja

n

Fe

b

Ma

r

Ap

r

Ma

y

in t

on

ne

s

.

Jun-Apr 2013/14 compared to 2012/13 : + 8,9%

NZ milk production

2010/11 2011/12 2012/13 2013/14

24 July 2014 44

Prices

in US$/t Aug-14 Sep-14 Oct-14 Nov-14 Dec-14 Jan-15

Weighted

average

price % change Aug-14 Sep-14 Oct-14 Nov-14 Dec-14 Jan-15

AMF n.a. 3 198 3 223 3 289 3 373 3 475 3 250 - 9.9% - 11.6% - 11.0% - 7.0% - 7.1% - 5.3%

Butter 4 800 3 115 3 035 3 125 3 195 n.a. 3 144 - 1.1% - 1.5% - 1.6% - 2.1% + 0.2% - 0.2%

BMP n.a. 4 485 4 360 4 440 n.a. n.a. 4 426 + 7.0% + 14.3% - 6.8% + 3.7%

Cheeses n.a. 4 314 4 129 4 101 n.a. n.a. 4 164 - 1.5% - 3.9% - 1.4% - 0.5%

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

Rennet Casein n.a. 9 605 10 192 n.a. n.a. n.a. 9 761 - 9.5% - 12.0% - 3.8%

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

SMP 3 850 3 478 3 509 3 612 3 543 3 535 3 516 - 7.7% - 1.2% - 9.0% - 8.3% - 4.1% - 5.5% - 6.5%

WMP n.a. 3 090 3 082 3 042 3 074 3 423 3 088 - 10.7% - 9.2% - 9.8% - 11.6% - 11.9% - 6.4%

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

15 Jul 2014 1 € = 1.3603 $ (ECB rate)

in €/t Aug-14 Sep-14 Oct-14 Nov-14 Dec-14 Jan-15

Weighted

average price

AMF 2 351 2 369 2 418 2 479 2 555 2 389

Butter 3 529 2 290 2 231 2 297 2 349 2 311

BMP 3 297 3 205 3 264 3 253

Cheese 3 171 3 035 3 015 #VALUE! #VALUE! 3 061

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

Rennet Casein 7 061 7 493 #VALUE! #VALUE! #VALUE! 7 175

Lactose 7 931

SMP 2 830 2 557 2 579 2 655 2 604 2 599 2 585

WMP 2 272 2 266 2 236 2 260 2 516 2 270

% change by contract from previous

auction

Results of the GDT Auction of 15.07.2014

ANNEX 2

Short-term prospects for EU crop and dairy markets

European Commission

1

Short-term prospects for EU crop and dairy

markets

Milk market observatory

24 July 2014

Sophie Hélaine

European Commission

2

Outline

• Short-term outlook for arable crops

• Short-term outlook for milk & dairy products

• Price transmission

2

Published on 7 July 2014

Based on data available till

15 June 2014

Main market developments in the EU

• Arable crops

• Favourable weather conditions

• Above average 2014 harvest

• Partial recovery of the cereal stock-to-use ratio

• Dairy

• Record EU milk collection in 2014; no surge expected in 2015

• Milk prices to remain firm, despite abundant supply worldwide

• Strong world demand, especially for powders, supports prices

3

Mild 2014 temperatures boosted crop growth

4

Source: Mars-JRC Agri4cast http://mars.jrc.ec.europa.eu/mars/Bulletins-Publications

http://mars.jrc.ec.europa.eu/mars/Bulletins-Publications



Very good EU cereal harvest in 2014/15 for the 2nd year in a row

5

240

250

260

270

280

290

300

310

320

330

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

2020

2021

2022

2023

million t

Medium-term outlook

Short-term outlook

Source: DG Agriculture and Rural Development

6

Record 2013/14 EU cereal exports

6

0

5

10

15

20

25

30

35

40

45

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

2020

2021

2022

2023

million t

Short-term outlook

Medium-term outlook


7

Leading to slower EU stocks recovery

7

20

25

30

35

40

45

50

55

60

65

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

2020

2021

2022

2023

million t

Short-term outlook

Medium-term outlook


Lower wheat prices in 2013/14

150

170

190

210

230

250

270


EU

R/t

2013 US SRW Gulf 2014 US SRW Gulf

2013 France Dlvd Rouen 2014 France Dlvd Rouen

2013 France

2013 US

2014

8

Source: DG Agriculture and Rural Development and USDA

Pasture: biomass conditions below normal in the spotted red areas affecting more sheep than dairy

9

Source: Mars-JRC Agri4cast http://mars.jrc.ec.europa.eu/mars/Bulletins-Publications




A 2014 record milk collection in the EU

10

120

125

130

135

140

145

150

155

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

2020

2021

2022

2023

million t

Quota

Short-term outlook

Medium-term outlook


Milk collection forecast by MS

-4%

-2%

0%

2%

4%

6%

13/12e 14/13f 15/14f


Increasing EU exports, driven by Chinese demand

-150

-100

-50

0

50

100

150

SMP WMP Cheese Butter FDP

Changes in 1

000 t

2013/2012

2014/2013

2015/2014

12


2014 forecasts comparison for the EU (June 2014)

DG AGRI USDA CLAL FAO

Milk del. Prod. 2.8% 3.3% 3.0%

SMP Prod. 10.3% 8.8% 16.7%

Cons. 0.3% 3.1%

Exports 27.0% 29.3% 14.5%

WMP Prod. 3.3% 4.1% 6.8%

Cons. 1.4% 1.2%

Exports 5.0% 11.7% -2.0%

Cheese Prod. 1.6% 1.8% 0.5%

Cons. 1.6% 0.3%

Exports 2.5% 1.5% 2.5%

Butter Prod. 2.5% 2.2% 5.9%

Cons. 2.9% 0.9%

Exports 9.0% 20.3% 4.0%

14

Very firm EU milk producer price*

14

200

250

300

350

400

450

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

2020

2021

2022

2023

EU

R/t

90th percentile

10th percentile

Projection

Actual price (2014: Jan-May)

Support price in milk eq.

* Farm gate milk price in real fat content, weighted EU average


15

Yearly change in EU monthly prices: Farm-gate milk price compared to consumer prices

-5

0

5

10

15

20

Farm-gate priceConsumer price

Note: Consumer price for Milk, cheese and eggs

Source: DG Agriculture and Rural Development and Eurostat

16

Huge differences among Member States

% change March 2014/13 May 2014/13

Farm-gate

price

Consumer price

Farm-gate price

Consumer price

EU 16.1 3.3 10.4 3.3

DE 16.9 8.7 17.8 7.7

DK 20.8 7.8 17.8 7.8

NL 23.2 4.0 6.3 4.7

PL 17.1 3.5 9.7 3.7

FR 17.0 0.8 7.0 1.8

ES 15.7 1.6 8.6 1.5

UK 15.8 2.1 13.4 0.4

IT 10.4 1.8 9.0 1.7

Source: DG Agriculture and Rural Development and Eurostat

17

For further information

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

• Medium-term outlook 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

17

Thank you

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









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

















ANNEX 3

Dairy investments in Europe in recent years (2012 to June 2014)

Cniel

Dairy investments in Europe

in recent years (2012 to June 2014)

Brussels, 24th July 2014

Method – Sources of information

CNIEL Economy Department - July 2014 2

Absence of statistics /

Dissection of the international press

with a fine tooth comb

Public information only taken into account

-> Underestimation of the global investment

-> Heterogeneous information content

All investments announced or finalized between 2012 and June

2014 are taken into account -> 4 possibilities

2012 June 2014 Investment public announcement

Investment completion

Method – Investments taken into account


October 2011 Spring 2014 Meierei

Wasbek

New Drier at Neumunster (DE) / 64 M€

New Drier at Carhaix (FR) / 100 M€

2015 February 2011 January 2014 (Building beginning)

Early 2012 March 2013

New Drier at Craon (FR) / 40 M€

Capacity extension at Baden (AU) / 12 M€

June 2014 2015

Meierei

Wasbek

Coopérative

des Erythrônes

…

Global results: huge activity in terms of investment!


€ 5.5 billion invested between 2012 and June 2014

190 projects

120 companies involved

Global investment breakdown in terms of products: Dry dairy ingredients are the main driving force!


Dairy investments announced or finalized

between 2012 and June 2014 (million €)

Dry ingredients 2 680 M€ Cheese 1 020 M€ Milk, dairy beverages 650 M€

Yoghurt, chilled dairy products 330 M€ Butter 100 M€

NB : 750 M€ other products

or non allocated

CNIEL / International press

Global investment breakdown in terms of countries: France, Germany, the Netherlands and Ireland have the highest concentration of investments in Europe.


Cyprus

1 020

580

Less than 100 M€

100 to 200 M€

200 to 500 M€

500 to 1 000 M€

More than 1 000 M€

1 090

870

Dairy investments announced or finalized

between 2012 and June 2014

(million €)

CNIEL / International press

Main investments concerning dried dairy products (whey, milk powder, infant formula)


Investments announced or finalized


exceeding 20 million € > 50 M€

20 to 50 M€

> 100 M€

Meierei

Wasbek

Main investments concerning cheese


Cyprus

Investments announced or finalized


exceeding 20 million € > 50 M€

20 to 50 M€

> 100 M€

Main investments concerning liquid milk, yoghurt and butter


Cyprus

Investments announced or finalized between 2012 and June 2014 exceeding 20 million €

> 50 M€ 20 to 50 M€ Yoghurt, chilled dessert

Liquid milk, dairy beverage

Yoghurt & liquid milk ; chilled warehouse

Butterfat

*

* : multisite investment by Sodiaal (60 M€) ;

** : multisite investment by Danone

**

*** : 3 year investment program (180 M€) including new UHT plant

***

> 100 M€

Investments can be spread geographically and can concern a large range of company profile - The example of France


Investments announced or finalized between 2012 and June 2014

> 50 M€ 20 to 50 M€

Yoghurt

Liquid milk, dairy beverage

Yoghurt & Liquid milk ; chilled warehouse

Butterfat

> 100 M€

Dried dairy products

Cheese

1 to 20 M€

Other products ; concentrator, boiler, R&D

*

**

* : multisite investment by Sodiaal (60 M€) ; ** : multisite investment by Danone

Coopérative

des Erythrônes

The European dairy sector has become attractive to Chinese investors over the last few years.

11 CNIEL Economy Department - July 2014

Chinese Synutra has invested € 90 million in a € 100 million

project set up with French Sodiaal to build two driers at Carhaix

(France). The opening is forecasted in 2015. The plant will

process 280 million litres of milk.

In 2013 Chinese Biostime brought € 20 million out the € 50

million invested jointly with Isigny Ste Mère in the building of a

new infant formula plant (30 000 t / y). Biostime has taken a

stake in the French coop.

In 2011 Chinese Ausnutria purchased 51% of Dutch Hyproca.

In 2013 it announced a € 67 million investment to expand

Hyproca’s drying capacity.

In 2013 Chinese Beingmate set up a partnership with the Irish

Kerry Group and invested € 20 million to set up a infant

formula plant in Ireland.

CNIEL / international press

Companies from New Zealand and Japan are also investing or contracting in order to secure sourcing in Europe.

12 CNIEL Economy Department - July 2014

Shareholder of the German protein processor Milei for more than a

decade, the Japanese group Morigana grew its stake to 70% in 2009,

then to 100% in 2012. It recently announced a 7-year investment

program of € 150 million to increase milk and whey protein output

capacity.

The New Zealander group Fonterra has set up several partnerships with

European processors, which provide it with whey components:

• JV DMV-Fonterra Excipients with Dutch FrieslandCampina

• JV Fast Forward Ltd with British First Milk

• Sourcing contract with Lithuanian Rokiškio sūris

• Sourcing contract with Dutch A Ware; Fonterra is building a whey

factory next to A Ware’s new cheese plant, which will be operational in

March 2015

• Sourcing contract with British Dairy Crest

CNIEL / international press

ANNEX 4

EU dairy products monthly stock situation

EDA

EU dairy products monthly stock situation

Milk Market Observatory

Economic Board

July 23rd, 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 July 2014

Outline

• Global Supply

• Global Exports

• Global Demand

• Global Stocks

• Conclusions

Global Supply

-1000 0 1000 2000 3000 4000 5000 6000

Net Position

USA

EU *

Australia

New Zealand

Uruguay *

Argentina

JAN – MAY PRODUCTION

-1,1%

+2,6%

+17,7%

+3,6%

+5,8%

+1,1%

+4,6%

EU Supply

• See EDA report

• Very strong on the back of high milk prices (lagging market reality), lower feed prices and favourable weather.

US Supply

• Milk Production Q2-2014:

– April 2014: +1,2% versus April 2013

– May 2014: +1,5% versus May 2013

– June 2014: +1,9% versus June 2013

• Outlook rest of 2014

– Robust herd expansion

– Continued Favourable Margins

– Growth expected to accelerate to above 2%

– Water is a concern in California

New Zealand Supply

• Milk Production

– DCANZ reported till May

• April 2014 is up 32% from April 2013

• May 2014 is up 25% from May 2013

• April-May 2014 is down 10% from April-May 2012

• 2013-14 season: +9%

– Outlook for new season

• Fonterra June collection is up 10% from June 2013

• New season expected to start strong

• Forecast 2014/15 season + 10%

Australia supply

• Milk Production

– Solid growth in the beginning of 2014 (compared to a weak base)

• May and June milk production is expected to be on par with 2013.

– 2013/14 season expected to finish on par with 2012/13

• Outlook

– For the 2014/15 season a growth of 2 % (180 000 tonnes) is expected

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

• Jan – Jun 2014 is down 2,45% from Jan – Jun 2013

• Outlook

– Wet conditions worsening (El niño)

– Unpredictable government interventions

Uruguay Supply

• Milk Production

– Jan – April 2014 up 3% versus 2013

– Growth slowing down from 4,8 % in Jan to 1,2% in April

Global Exports

0

50000

100000

150000

200000

250000

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

SMP WMP WHEY CHEESE BUTTER

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

EU Exports

60%

70%

80%

90%

100%

110%

120%

130%

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

SMP WMP CHEESE WHEY LACTOSE BUTTER

US Exports

40%

50%

60%

70%

80%

90%

100%

110%

120%

130%

3 monthly moving average (Q1-2014 = 100)

SMP WHEY CHEESE BUTTER

NZ Exports

30%

50%

70%

90%

110%

130%

150%

3 MONTHS MOVING AVERAGE (Q1 -2014 = 100%)

WMP SMP BUTTER AMF CHEESE

Australia Exports

40%

60%

80%

100%

120%

140%

160%

3 MONTH MOVING AVERAGE (Q1- 2014 = 100%)

SMP WMP BUTTER CHEESE WHEY

Argentina Exports

40%

60%

80%

100%

120%

140%

160%

180%

3 MONTHLY MOVING AVERAGE (Q1 2014 = 100%)

SMP WMP WHEY CHEESE Butter

Uruguay Exports

50%

100%

150%

200%

250%

300%

3 month moving average (Q1 2014 = 100)

WMP SMP CHEESE Butter

Global Demand

China Imports

20%

40%

60%

80%

100%

120%

140%

160%

3 MONTH MOVING AVERAGE (Q1-2014 = 100%)

WMP SMP WHEY LACTOSE CHEESE BUTTER

Indonesia Imports

40%

50%

60%

70%

80%

90%

100%

110%

120%

130%

140%

3 MONTH MOVING AVERAGE (Q4-2013 = 100%)

SMP WMP WHEY LACTOSE CHEESE

Philippines Imports

60%

80%

100%

120%

140%

160%

180%

3 month moving average (Q4-2014 = 100%)

SMP WMP WHEY CHEESE AMF LACTOSE

Mexico Imports

70%

80%

90%

100%

110%

120%

130%

3 Month Moving Average (Q4-2013 = 100%)

SMP CHEESE WHEY LACTOSE CASEIN(ATES)

Algeria Imports

60%

80%

100%

120%

140%

160%

180%

200%

220%

3 Month Moving Average (Q4-2013 = 100%)

WMP SMP CHEESE BUTTER

Russia Imports

0%

20%

40%

60%

80%

100%

120%

140%

3 MONTH MOVING AVERGE (Q4-2013 = 100%)

CHEESE BUTTER SMP WMP WHEY SPREADS

Global Stocks

• In the absence of good data we make indirect assessments

• With an exception for USA (where we have data) we believe stocks have increased in most supplying regions

• Reports of uncommitted stocks in importing regions

Conclusion

• Global demand remains good

• Price correction can temporarily temper demand on the way down but has the potential to boost demand once the perceived floor is hit

• As long as supply of global exporters outstrips the long term demand trend of 2 to 2,5 % downward price pressure will persist

Thank You

Eucolait

www.eucolait.eu

@Eucolait

• Sources used in presentation: GTIS, USDA, Dairy Australia, DCANZ, Inale

http://www.eucolait.eu/

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