eu dairy and butter markets situation fall 2010 · situation in autumn2010 − milk deliveries in...

EU Dairy and Butter Markets

Situation Fall 2010

Brussels, October 2010

Monika Wohlfarth

Zentrale Milchmarkt Berichterstattung GmbH

Tel. 030/4060799721 | [email protected]

Situation in Autumn 2010

− Milk deliveries in Western Europe recovered and are

increasing with remarkable growth rates

− Higher exports of cheese and SMP absorbed additional milk

volumes in the first half of the year

− Additional need in Russia because of drought, high import

demand in Asiademand in Asia

− Increased international prices, EU is competitive

− Consumption in EU stabilized

− Milk prices recovered to old levels

− Public stocks are reduced without pressure on prices (so far)

October 2010 | © ZMB Zentrale Milchmarkt Berichterstattung GmbH

Since May more milk in Europe…

1,2 % more from

April to August

11,5

12,0

12,5

13,0

EU-milk deliveriesMill. of tonnes


9,0

9,5

10,0

10,5

11,0

Jan. Feb. März Apr. Mai Juni Juli Aug. Sept. Okt. Nov. Dez.

2008 2009 2010

Source: Eurostat, National Statistics.

© ZMB

Developments in milk deliveries mixed

Sweden ; -30

Italy; -37

Hungary; -64

Poland; -107

Development of milk deliveries in EU countriesApril to August 2010; changes in '000 tonnes

EU total: 0,7 Mill. tonnes more milk


Germany; 237

France; 200

UK; 188

Ireland; 178

NL; 142

Denmark; 52

Belgium; 35

Austria; 32

Slowakia; -19

Czechia; -22

Higher milk prices and

Space in quotas stimulate

milk production in many

Countries, despite of rising

feed prices

Milk Output in exporting countries increasing

Latest T rends

USA August +2,7%

A ustralia July +3,2%

A rgentina July +11,1%

B razil June +14,9%

B elarus August -2,9%

Ukraine August -4,9%

Milk Output in different countries

000 t January - 2009 2010 10:09 *

EU-27 August 93.207 93.518 + 0,3%

Switzerland July 2.043 2.060 + 0,8%

Croatia July 410 382 - 7,0%

Belarus 1)

August 4.671 4.700 + 0,6%

Russia 1) April 8.874 8.937 + 0,7%

Ukraine 1) August 8.159 7.872 - 3,5%


Canada June 3.940 3.964 + 0,6%

USA 1) August 58.069 58.846 + 1,3%

Mexico August 7.310 7.353 + 0,6%

Argentina 2)August 4.271 4.181 - 2,1%

Brazil June 9.504 10.448 + 9,9%

Chile July 1.094 1.173 +7,2%

Japan July 4.698 4.627 - 1,5%

Australia 1) July 4.709 4.696 - 0,3%

New Zealand June 2008 to May 2009 16.500 16.800 +1,8%1) Milk production 2) Milk Deliveries of 20 dairies, representing

64 % of milk deliveries. © ZMB Sources: ZMB, national statistics.

More Milk traded in 2009, NZ gained Share

13,3

11,9

12,9

13,6

13,0

NZ

EU

Exports of Dairy Products to international MarketsMillions of Tonnes MEQ's


4,1

4,4

16,4

6,0

3,8

11,9

4,7

4,2

USA

AUS

NZ

2007 2008 2009

Source: Own calculations based on national statistics.. © ZMB

World Trade in Dairy Products increased further, but Butter Trade reduced

Cheese

Whole milk powder

2010

2009

Trade in Dairy Productsin tons


0 200.000 400.000 600.000 800.000 1.000.000

Whey powder

Butter

Skim milk powder

2009

© ZMB

January - June/July

Data preliminary: Total

amount of exports of the

biggest exporters

Strong EU-Exports in the first half of 2010

317291

377

276

2009 2010

EU-27: Exports of Dairy Products

('ooo Tons, January-July)


90114

134

220

18

87

276

213

136

217

20

Butter* Cheese WMP SMP Condensed Wheyp. Casein

*Butteroil incl. Source: Eurostat© ZMB

Less dairy products imported

46,045,12009

2010

EU-27: Imports of Dairy Products

('000 tons, January-Julyincluding inward processing)


23,6

0,13,6

1,8

20,821,8

1,5 2,1 2,6

16,8

Butter Cheese WMP SMP Whey Powder

Casein

© ZMB*incl. Butteroil

EU-Butter production is recovering

150

170

190

EU-27: Butterproduction '000 tonnes

2010

2008

From July 2009 to June

2010 production was

reduced by 107,000 tons


110

130

150

Jan. 05 Apr. 05 Jul. 05 Okt. 05

2009

2010

© ZMB

Since May more Milk Fat delivered

46000

48000

50000

2008

2009

2010

EU: Production of milk fat'000 tonnes


38000

40000

42000

44000

Jan. Feb. März April Mai Juni Juli Aug. Sept. Okt. Nov. Dez.

Quelle: Eurostat, nationale Statistiken.© ZMB

More milk(fat) used for cheese

EU-Production of Dairy ProductsJanuary to July July

000 t 2009 2010* 10:09 * 10:09*

Liquid milk 19.369 19.456 + 0,4% - 0,0%

Cream 1.380 1.384 + 0,2% - 3,7%

Fermented Products 5.123 5.257 + 2,6% + 2,5%

Butter 1.152 1.096 - 4,8% - 4,1%


Butter 1.152 1.096 - 4,8% - 4,1%

Cheese 4.818 4.893 + 1,6% + 1,0%

WMP etc. 482 469 - 2,6% - 3,4%

SMP 717 655 - 8,6% - 15,9%Condensed milk 638 603 - 5,5% + 0,1%*) Provisional.

Sources: ZMB, Eurostat, national statistics. © ZMB

Butter production reduced nearly everywhere,

so far …

EU Butter Production July

000 t 2009 2010* 10:09 ** 10:09*

Czech Rep. 21,0 15,8 - 24,9% - 26,2%

Denmark 24,0 21,4 - 10,8% - 25,0%

Germany 282,2 270,5 - 4,1% - 6,7%

Spain 23,8 22,9 - 3,8% + 28,6%

France 260,2 249,8 - 4,0% - 2,4%

Ireland 80,5 79,9 - 0,8% + 10,3%

Italy 54,7 55,4 + 1,2% + 3,1%

January to July


Lithuania 10,1 5,9 - 42,0% .

Netherlands 83,0 81,0 - 2,4% + 6,0%

Austria 19,8 19,9 + 0,4% - 5,8%

Poland 99,4 94,8 - 4,6% + 3,9%

Portugal 18,3 16,2 - 11,5% - 49,5%

Slovakia 5,0 4,4 - 13,0% + 2,1%

Finland 33,7 31,9 - 5,2% - 10,4%

Sweden 18,9 14,4 - 23,7% - 7,6%

United Kingdom 76,0 73,3 - 3,6% + 3,2%

EU-27 1.152 1.096 -4,8% -4,1%

*) Provisional.

Sources: ZMB, Eurostat, national statistics. © ZMB

… outside EU, too

Butterproduction

Period 2009 2010 ± % Vj.

EU-27 Jan. - July 1.152 1.096 - 4,8%

USA Jan. -Aug. 496 470 - 5,3%

Canada Jan. - June 48 45 - 6,3%

Australia Jan. - June 56 49 - 12,2%


Australia Jan. - June 56 49 - 12,2%

Japan Jan. - July 51 50 - 0,9%

Ukraine Jan. -Aug. 54 54 + 0,4%

Switzerland Jan. - July 31 32 + 1,8%

Total Amount 1.887 1.796 -4,8%

Source: ZMB, national statistics.

Different Butter prices

Germany (Hannover) Netherlands

2,00

2,50

3,00

3,50

4,00

J F M A M J J A S O N D

20092008

E/kg

2,00

2,50

3,00

3,50

4,00


20092008

E/kg

2010 2010


France (Paris) Italy (Milano)

2,05

2,55

3,05

3,55

4,05


2009

2008

E/kg E/kg

2,00

2,50

3,00

3,50

4,00


2009

2008

20102010

Different Butter prices (II)

United Kingdom (London) USA (Chicago)$/t£/t

1600

2150

2700

3250

3800


2009

2008

2000

2750

3500

4250

5000


2009

2008

20102010


World Market World Market


US-$/t E/kgE/kg

1700

2500

3300

4100

4900


2009

2008

1,30

1,90

2,50

3,10

3,70


2009

2008

20102010

Butter prices surged

4,00

4,50

Butter Prices

bulk, Hannover

EUR/kg


2,00

2,50

3,00

3,50

Jan 02 Jan 03 Jan 04 Jan 05 Jan 06 Jan 07 Jan 08 Jan 09 Jan 10

Intervention price

Hannover

High Butterprices at international Market

compared with milk powder

3.500

4.000

4.500

5.000

5.500

International Dairy Prices

US-$/tSMP

VWMP


500

1.000

1.500

2.000

2.500

3.000

3.500

Jan 94 Jan 96 Jan 98 Jan 00 Jan 02 Jan 04 Jan 06 Jan 08 Jan 10

Butter

© ZMB

International Prices are higher than ever before

4.000

5.000

6.000

7.000

Butter PricesUSD/ton

EU


0

1.000

2.000

3.000

4.000

Jan 03

Jul Jan 04

Jul Jan 05

Jul Jan 06

Jul Jan 07

Jul Jan 08

Jul Jan 09

Jul Jan 10

Jul

EU

World Market© ZMB

Butter exports since April weak

12.000

14.000

16.000

18.000

EU: Exports of Butter and Butteroil to Third Countries*in tons


0

2.000

4.000

6.000

8.000

10.000

Jan. Feb. Mar. April May June July Aug. Sept. Oct. Nov. Dec.

2008 2009 2010

* in product weight

Only USA and Brazil exported more

Exports of Butter and Butteroil

tonns 2009 2010 ± %

EU-27 Jan. - Jul. 90.240 87.340 - 3,2

New Zealand Jan. - Jul. 285.709 238.158 - 16,6

Australia Jan. - Jul. 50.030 42.440 - 15,2

USA Jan. - Jul. 11.626 34.138 + 193,6

Switzerland Jan. - Jul. 2.779 2.640 - 5,0


Switzerland Jan. - Jul. 2.779 2.640 - 5,0

Argentina Jan. - Jun. 7.667 5.139 - 33,0

Brasilia Jan. - Jun. 1.963 2.059 + 4,9

Total amount 450.014 411.915 - 8,5

Sources: ZMB, EU-Comm., GTA, national statistics

Prices of vegetable oil are increasing, but they

are lower than Butter prices

1200

1400

1600

1800

Coconut Oil Prices(Philippines, cif Rotterdam)

2007

2008

US$/Tons


200

400

600

800

1000

Jan March May July Sept Nov

2009

Source: FAO, Oilworld

2010

Less Butter in PSA than in 2008 and 2009

100

120

140

160

2008 2009 2010

EU: Private Storage of Butter

(Stocks at the end of month, '000 tons)


0

20

40

60

80

Jan. Feb Mrz Apr Mai Jun Jul Aug Sep Okt Nov Dez

..but supplies replenished by intervention stocks

262,5

197,0

EU: Intervention Stocks Beginning of October ('000 t)

2008 2009 2010


0,0

141,6

0,0

77,2 83,3

1,5

73,9

Butter, public Butter, private Skim Milk Powder

Source: ZMB, European Commission.

Private Butter consumption decreased again

German: Household purchases (GfK)

Jan Feb Mrz Apr Mai Jun Jul Aug Sep Okt Nov Dez Jan - Aug

Butter

1.000 t

2008 22,7 19,0 22,5 22,3 22,7 21,3 18,7 20,2 20,4 25,1 27,2 29,0 169,4

- 14,0

+ 2,8 + 2,1

- 0,6 - 1,0

- 7,6 - 7,4- 3,0 - 3,6


2008 22,7 19,0 22,5 22,3 22,7 21,3 18,7 20,2 20,4 25,1 27,2 29,0 169,4

2009 23,4 20,6 22,7 23,8 22,7 20,8 21,4 20,5 22,1 27,1 25,0 27,9 175,8

2010 20,2 21,2 23,1 23,7 22,4 19,2 19,8 19,9 169,5

±%Vj. - 14,0 + 2,8 + 2,1 - 0,6 - 1,0 - 7,6 - 7,4 - 3,0 - 3,6

Butter Market balanced in the second half of

2010

EU Butter Balance Sheet

'000 t 2006 2007 2007 2008* 2009* 2010**

EU 25 EU 25 EU 27 EU 27 EU 27 EU 27

Initial stocks 164 110 110 100 150 145

Total production 2.080 2.100 2.110 2.090 2.050 2.010

- on farms 20 20 20 20 20 20

Imports 82 85 85 65 62 45

Exports 248 220 211 147 143 140Final stocks 110 90 100 150 145 85


thereof public stocks 64 0 0 0 79 2

Disappearance 1.968 1.985 1.994 1.958 1.974 1.975

- at market prices 1.493 1.831 1.840 1.958 1.974 1.975

- "subsidised"1)475 154 154 0 0 0

Per capita (kg) 4,3 4,3 4,0 3,9 3,9 3,9*)Provisional **) Forecast. Updated September 2010

1) Until April 2007 subsidised markets. Including direct-butteroil. Subsidised cream not included.

Further prospects for the butter market

− EU-Production will increase slightly until the end of

2010

− International supplies will be limited, but high

prices are dampening demand

− Demand in EU suffer from high prices, but to lesser − Demand in EU suffer from high prices, but to lesser

extend than 2007

− EU-butter-market is likely to be in balance until the

end of the year

− If the cheese market will grow further in 2011 no

oversupply of butter is expected


More Cheese produced and exported

EU Cheese Balance Sheet

'000 t 2006 2007 2007 2008* 2009** 2010**

EU 25 EU 25 EU 27 EU 27 EU 27 EU 27

Production 8.695 8.811 8.978 9.035 9.030 9.160- from cows' milk in dairies 7.965 8.082 8.217 8.285 8.280 8.420

- on farms 90 85 100 100 100 100

- from other milk 630 644 661 650 650 640

Imports 108 105 94 89 84 80


Imports 108 105 94 89 84 80

Processing addition1)263 260 265 255 250 250

Available 9.065 9.176 9.337 9.379 9.364 9.490

Exports 584 610 594 555 576 640Stock Change -10 20 20 10 -30 0

Consumption 8.491 8.546 8.723 8.814 8.818 8.850

- per capita (kg) 18,3 18,3 17,6 17,7 17,7 17,7

*)Provisional **) Forecast. Updated September 2010

Cheese prices recovered

3,60

4,00

4,40

Euro/kg Germany: Semi Hard Cheese Block, Gouda, 48 %, Edamer 40 %

Average invoice price


2,00

2,40

2,80

3,20

412007

4651 6 111621263136414651 7 121722273237424752 6 111621263136

Average invoice price

daily price

2008 2009 2010

Substantial SMP-Stocks will remain

EU SMP Balance Sheet

'000 t 2006 2007 2007 2008* 2009* 2010**

EU 25 EU 25 EU 27 EU 27 EU 27 EU 27

Opening stocks 74 94 95 128 220 319

Production 1.036 1085 1090 1040 1.100 1.050

Imports 19 9,7 5,5 5,8 6 10

Available 1.129 1188,7 1190,5 1173,8 1.326 1.379

Consumption 950 860 870 775 780 790


Consumption 950 860 870 775 780 790

- other than feed 600 620 625 625 620 620

- in feed 350 240 245 150 160 170

Exports 84 200 199,4 179 227 320

Ending stocks 95 128 121 220 319 269

- in intervention 0 0 0 0 260 180


SMP-Prices higher than intervention

3.000

3.500

4.000

EUR/t© ZMP 2009

Quotation, food quality

SMP Prices


1.500

2.000

2.500

3.000

Jan 03

Juli Jan 04

Juli Jan 05

Juli Jan 06

Juli Jan 07

Juli Jan 08

Juli Jan 09

Jul 09

Jan 10

Juli

Intervention Purchase Price

WMP-Export not easy

EU Balance Sheet of Whole Milk Powder

'000 t 2006 2007 2007 2008* 2009* 2010**

EU 25 EU 25 EU 27 EU 27 EU 27 EU 27

Production 790 770 775 878 768 780

Imports 2 2 2 2 2 2


Imports 2 2 2 2 2 2

Exports 423 362 362 481 451 420

Change in stocks 0 30 30 20 -55 0

Sales 369 381 385 379 374 362


EU-Prices of WMP increased

3.000

3.500

4.000

4.500

EUR/t

EU

WMP Prices


1.000

1.500

2.000

2.500

Jan 01

Jan 02

Jan 03

Jan 04

Jan 05

Jan 06

Jan 07

Jan 08

Jan 09

Jan 10

World Market

EU

© ZMB

Milk prices higher than 30 Eurocent again

Milk prices - Germany Milk prices - France

EUR/100 kg EUR/100 kg

20

25

30

35

40


2008

2009

2010

20

25

30

35

40


2008

2009

2010


Milk prices - Poland Milk prices - USA

EUR/100 kgEUR/100 kg

15

20

25

30

35


2008

2009

2010

15

20

25

30

35


2008

20092010

34

38

Support by Intervention and Average Farm Milk Price

(3.7 % fat, Germany)

Farm milk price Germany

Euro/100 kg

Forecast 2010

The milk price crises is over

September 2010 | © ZMB Zentrale Milchmarkt Berichterstattung GmbH

18

22

26

30

1968 1980 1983 1985 1987 1989 1991 1993 1995 1997 1999 2001 2003 2005 2007 2009

Support by Intervention

Prices increase

Contraction of demand, Increase of Production

Reducing of stocks

The „Milk Price Cycle“ – how to manage

volatility

Stocks built up

Prices fall

Demand increases

faster than production


Very slow interest in Eurex-Futures

Eurex - FBUTEUR/ton

4

5

6

3700

4000

July/October-Contract

contractsEurex - FSMP

EUR/ton

4

5

6

2400

2600

contracts

July/October-Contracts


© ZMB

0

1

2

3

2800

3100

3400

31.5 14.6 28.6 12.7 26.7 9.8 23.8 6.9

Open Interst Contracts Prices

July/October-Contract

0

1

2

3

1800

2000

2200

31.5 14.6 28.6 12.7 26.7 9.8 23.8 6.9

Open Interst Contracts Prices

Further prospects

− More milk in the second half of 2010 expected,

increasing milk prices stimulate production

− More milk will go in cheese, only a slight recovery of

production of Butter and SMP expected

− Strong production in other export regions− Strong production in other export regions

− Exports will absorb the additional volumes, unexpected

needs in Russia, robust demand in Asia

− How long will the market stay in the upper side of the

cycle?


Thank you

for your attention!

Monika Wohlfarth, CEO

ZMB Zentrale Milchmarkt Berichterstattung GmbH

www.milk.de

[email protected]


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