WEEKLY EU MARKET UPDATE WEEK 13

GENERAL

The market continues to be more alive as a result of the price hike of last week in NZ and subsequently in the rest of the world. This along with growing concerns regarding global milkproduction which has gone into minus for Q1 on a YoY basis. Current estimates mention -0,7%. To put this figure into a more concrete perspective; This roughly equals a SMP production of over -100.000 tonnesalong with over -50.000 tonnes of Butter for Q1….

Although market prices are already on a high level, they seem unlikely to weaken in Q2. The EU started the year with an historically low stocklevel of about 40.000 of SMP with no back up in the form of old intervention stocks. January exports reached a level of 35.200 tons which was a YoY decline of 15,9%. EU SMP production fell in the same period by about 10% however, thus resulting into a detoriation of the opening balance 2013 of about 2500 tonnes. Figures from individual member states that have been seeping through during the past two months hint toward a continued lower SMP production compared to last year.

Export demand is good and in absence of Oceania this gets filled in by EU and USA in substantial part.

A few days ago the results of the ONIL tender were made known to the participants. By the look of things only 15000tonnes of FCMP and 25000 tonnes of SMP were booked. Less than a quarter of that of EU origin. We don’t get the impression that this overly concerns the market as exporters who did not get any quantities claim to be capable to sell elsewhere on the world market at equal or even better prices.

OFFICIAL DUTCH QUOTATIONS 27th March
Product / €/tonne / change in €/tonne
Butter / 3450 / +90
Skimmed Milk Powder food / 2770 / +80
SkimmedMilkPowder feed / 2660 / +100
Full Cream MilkPowder / 3250 / +150
SweetWhey Powder feed / 960 / +50

WHEY & WHEY DERIVATIVES

The higher end derivatives remain wanted on all markets. WPC80, WPI, DEMIN90 all fetch terrific prices. Permeate and WPC 30-35 still undervalued but hae gone up in price a little. Lactose stable at decreased levels. Potential to go up a bit in view of expected increase imn SMP/FCMP production. Prices mentioned by buyers for Q2 are < € 1250/tonne. The latter are on offer too for spot delivery at these levels. In view of lower forecasted production WPC35 seems to firm up a bit from historically low prices compared to SMP.

SWP for feed has been traded up with current prices at € 990/t. Permeate for feed is reported to have been traded in a bandwidth of €600-€670 which feels underpriced in comparison.

SMP/FCMP

SMP firmer outlook on short term. Current pricing lies between € 2800-€2850 depending on origination and/ or final export destination.

FCMP again firmer this week at levels between € 3300- 3400,-/mt with room to move up in view of improved competitiveness on the world market.

SMP for feed has last traded at € 2675. Current offers > € 2700/t.

CASEIN/CASEINATES

Both products may stay where they are on short term but move up in the next months.

Acid casein traded at levels around the €7250/t- €7500/t and caseinate traded at levels of around the € 7600-8200/t. Some cheaper caseinates are available based on converted casein. Rennet casein currently wanted but with little availability. Pricing in the € 7300 - €7500/t range.

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.

Acid casein and caseinates ample availability but rennet casein less mainly because of Irish producers having less availablility.

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