Due to high butter price
Food price index shows rise again
World food prices have risen for the third month in a row. The increase is mainly caused by the high price of butter and the increasing demand for cheese. This is shown by the food price index of the United Nations (UN).
The FAO dairy price index rose by 3,6% in July compared to June. There was even an increase of 52,2% compared to June 2016. According to the FAO, the peak has not yet been reached. "Despite these significant gains, the index is still 21% lower than at its peak in February 2014."
Butter price hits records
The increasing demand for butter pushed prices to a peak in July. As a result, the gap between butter prices and other dairy prices has widened.
Global butter prices rose in June with prices between $900 and $1.300 per tonne. The butter price also reached a record high of $6.100 per tonne in Europe in that month. According to the market analysis of the US Dairy Export Council (USDEC), prices will rise further in July.
In Oceania, a price increase of no less than 104% was visible. This means that the country doubles the butter price compared to the same period last year. "The high prices mainly ensure that the butter is sold on the domestic market, because that is where the buyers are who can afford the most. As a result, less butter is available for export."
Rising butter prices and falling prices for whole milk powder create the expectation that butter production will increase in the second half of 2017 in the US, Europe and Oceania.
Demand for cheese is increasing
The export of cheese has also increased considerably in recent years. South Korea bought 11% more cheese, China 25% more and Southeast Asia recorded an increase of 12%. In Russia, the import of cheese increased by 50% compared to 2016. This is despite a ban on Western agricultural products until December 2018.
However, the price of skimmed milk powder has mainly fallen in recent times. "This is mainly caused by the poor demand for the product and the fact that the European Union is going to sell more from intervention," according to the FAO.
The falling demand for skimmed milk powder means that there is currently a surplus of 352.000 tons. As a result, price increases are considerably limited. As a result, Australia and Argentina reduced imports of skimmed milk powder by 42% and 72% respectively compared to the same period last year.
Do you want to keep a close eye on milk, cheese and butter prices? Subscribe Milk & Feed Pro!
Kimberly Baker
© DCA Market Intelligence. This market information is subject to copyright. It is not permitted to reproduce, distribute, disseminate or make the content available to third parties for compensation, in any form, without the express written permission of DCA Market Intelligence.
