Futures markets show tentative upturn

Published 9 May 17

The Forward Market Performance (FMP*) indicator moved back into a positive position for April due to the improved performance of Aug-17 futures contracts relative to the overall negative movement seen in the EU AMPE value for Apr-17.

Moderate improvements were seen in forward contract pricing for butter and SMP on futures markets in April. This may be reflecting views that supply and demand in dairy markets is expected to be well balanced going into the autumn.

Meanwhile, movements in EU wholesale markets for SMP and butter diverged. SMP prices dropped as intervention stocks continue to overhang the market, while strong domestic demand continued to prop up butter prices. Overall, markets dropped marginally, bringing EU AMPE down by 0.9% in April.

FMP Table

*FMP is the relationship between an AMPE figure, based on current EU wholesale prices, and a FMPE (Future Milk Price Equivalent) figure, based on futures prices. It assess the buying of those involved in the futures markets to see the potential supply/demand relationship in the coming months. Therefore, a negative figure indicates that those involved in the futures market during that month feel there could be relatively high supply and the market will become supply focused in the coming months. A positive figure means those trading futures believe supply will become tight, pushing demand and causing the market to become demand focused.

For more information on FMP, please click here.