EU wholesale prices level off

Published 2 November 16

According to figures for the Milk Market Observatory (MMO), the rise in European wholesale prices slowed down in October, with some decreases seen towards the end of the month.

While EU prices appear to have stagnated somewhat, the latest Global Dairy Trade auction posted an 11.4% increase in its price index at the start of November. The difference in market sentiment is likely down to timing issues, and expectations on milk availability. Over the last few months, some EU prices had risen ahead of GDT prices, with GDT more recently catching up.

On the milk availability side, EU milk production slowed significantly during May-July, which is when EU prices were outstripping GDT prices. EU production has more recently showed signs of stabilising, which may partly explain why prices have recently plateaued. For more information on global milk production, see here. NZ production is now showing signs of a more significant slowdown and GDT prices have responded.

Although UK prices will be affected to some extent by some recent declines at EU level, UK pricing is currently being buffered by exchange rate movements. Further weakening of sterling against the euro during October has helped bolster UK prices, dampening the effect of recent reductions on the continent. For example, while EU Cheddar prices decreased from €3,160 to €3,100/tonne between the start and end of October, in Sterling terms this still equated to an increase from £2,733 to £2,767/tonne.

EU wholesale prices 02.11.16