WEEKLY EU MARKET UPDATE WEEK 08

GENERAL

The market continues to trade at a very low pace. The current Dollar – Euro movement may offer more possibilities.

Current SMP pricing is around US $ 3450/t FOB, which brings EU product more or less on par with New Zealand’s March shipment pricing and slightly below USA spot levels. Forward pricing in USA is below that of the EU.

This should offer export potential, especially in the light of lower milk pay out prices from Coops and lower milk prices on the free market. Raw milk now traded 1-2 cents below last week’s prices and Concentrate around the € 2300/tonne.

Milk supply going up. Earlier this week Germany reported a 2,8% YoY increase. Also in the USA, an increase of milk was reported of 0,6% at the ned of January. New Zealand, in spite of unfavorable weather in the last months of their production season still up between 5-6% YoY. No mean feat given the record increase they recorded in the previous season.

This week’s GdT saw yet another TWI gain of 3,1%. Highest gains were for fat rich products – AMF, Cheese and FCM. Minimal gains for protein based product and in the case of MPC even a small loss of 0,2%. Rennet casein up 0,8 %, SMP up by 1 % in average.

First talks with Onil ( Algeria) have been held in the past 5 days. Rumour has it the quantity tendered for amounts to abt 60.000 tons between FCMP and SMP. Closing date for the tender is 6th March. Shipments from May onwards. Given the ever returning quantities Onil buy and the minor deviation in that pattern – in spite of Algeria’s efforts to lift domestic milk production - makes it hard to see this change the overall sentiment in any significant sense. The emerging view is that Q1 exports are most likely down significantly YoY with a Q2 outlook that’s uncertain. Even if Onil would source their total order quantity for SMP from EU, in all likeliness this still does not compensate the fall in exports in Q1 vs 2012 exports that’s expected.

OFFICIAL DUTCH QUOTATIONS 20th February
Product / €/tonne / change in €/tonne
Butter / 3300 / unchanged
Skimmed Milk Powder food / 2590 / -20
SkimmedMilkPowder feed / 2510 / -40
Full Cream MilkPowder / 2940 / unchanged
SweetWheyPowder feed / 880 / unchanged

WHEY & WHEY DERIVATIVES

The market for whey derivatives remains fairly stable with in pricing compared to ther dairy products. It must be noted that demand remainsgood especially for Demin and higher WPC’s but with better availability. Permeate and WPC 30-35 still weak at low levels. Lactose feels much weaker too which can be explained out of lower SMP/FCMP production which causes a lower demand for protein standardization. Prices mentioned by buyers for Q2 are < € 1250/tonne.

On the world market some competitive prices are being offered for DEMIN and WPC80I from non EU origins. Especially Lactose from USA is offered very competitive for Q2 delivery at levels translating to +/- $ 1300/tonne ex works USA.

With regards to SWP for feed applications there’s a very thin market. Currently a price of € 865/tonne is traded for bulk cip Netherlands.

SMP/FCMP

SMP steady to slightly weaker.Price levels have gone under € 2600,- and are now generally traded between € 2550-2575,-

FCMP stable this week at a level of around € 2950-3000,-/mt.

SMP for feed was last traded at € 2450. Little trade activity.

CASEIN/CASEINATES

Both products are weakening.

Acid casein traded at levels around the €7100/t- €7400/t and caseinate traded at levels of around the € 7600-8200/t.Some cheaper caseinatesare available based on converted casein. Rennet casein currently traded at a level of around € 7200/mt.

Caseinate from EU is facing heavy competition from converted material based on third countries’acid casein. According to current pricing in India and Eastern Europe for casein, caseinate can be sold to USA and Asia at levels of < € 6700,-/tonne CFR these destinations.

Availability for all caseins and caseinates is reported as hugely improved with good availability.

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