Heavy stocks could add to spring flush price pressure

Published 8 December 15

EU SMP and cheese stocks continued to build between July and September 2015, instead of following their usual seasonal decline over these months.

SMP stocks have risen off the back of increased milk production, with EU manufacturing up 6.9% in January to September compared to last year. According to the European Dairy Association (EDA), SMP stocks are forecast to reach more than 350k tonnes by the end of the year, around a fifth of the EU’s annual production.

Cheese manufacturing increased just 0.6% over the same period, but stocks built due to the loss of exports following Russia’s trade ban from August 2014.There are concerns that the seasonal rise in milk production next spring could put further pressure on cheese production, once powder dryers have reached full capacity. This, coupled with the already high stock levels, could put further downward pressure on prices in early 2016.

Stocks 8Dec15