Production Pressure on Dairy Prices
Posted on: Wednesday, 23 April 2008, 18:00 CDT
The majority of dairy commodity prices held this week, with only butter and whole milk powder weakening slightly by US$50/tonne.
The increased production from both the EU and the US has put downwards pressure on world prices. European milk production season is off to a good start, with reports from milk producers and processors that they have already met seasonal peaks. US milk production has increased by 2.4 per cent during March 2008 compared to March 2007.
Fonterra has announced it will launch an online sales channel for dairy commodities. Milk powder will be the first product group to be traded, which is scheduled to start in July. The trading system may lead to setting the global benchmark for dairy commodity prices, reducing the volatility of the markets.
BEEF
The US imported beef market firmed 1 to 2c/lb last week and bull and cow prices rose to 152c/lb and US142c/lb, due to the limited imported product available. US end-users are holding back on the high prices being offered, and are shifting towards buying the cheaper domestic product. The EU restrictions placed on Brazilian beef, resulted in New Zealand exports to the EU rising substantially by 117 per cent in March 2008 compared to March 2007. The NZX Agrifax market Indicators for beef increased between 5c/kg and 6c/ kg this week. Schedules in the North and the South Island are unchanged this week.
LAMB
The international lamb market has turned in favour of suppliers, as overseas exporters begin to realise the likelihood of a lamb shortage. Lamb exports during March were back 18 per cent due to diminishing supplies. Schedules in the North Island and South Island were generally steady.
(c) 2008 Waikato Times. Provided by ProQuest Information and Learning. All rights Reserved.
Source: Waikato Times
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