Discount on milk powder EU increases

On March 20, the EU managed to sell 4.127 tons of skimmed milk powder from intervention. The bids ranged from €50,10 to €112,10 per 100 kilos. These are prices that do not come close to the €169,80 per 100 kilos at which the product was purchased in 2016 and 2017. The minimum sales price was ultimately set at €105 per 100 kilos. 

The bottom sinks further
The lower end of the price fell from January to March from €119 to €105 per 100 kilos, a decrease of 11,8%. The daily price fell by 7,2% in the same period. It is most likely the explanation why the volume sold (compared to the previous auction) decreased slightly. For example, the market indicates that the stocks are starting to become old, which means that a significant discount (compared to the daily price) is necessary to make the purchase interesting.

If the volume of 4.127 tons of skimmed milk powder is added to the tons sold in January and February, the total is 10.028 tons. A drop in the bucket, when compared to the volume that was still present in the intervention at the end of February (375.699 tons).

Another 7,5 years
The market likes to calculate how many months are still needed to get rid of this volume (based on the last volume sold). There are currently 91, which means that the EU will be rid of its stock in 7,5 years. In practice, this is not possible due to the age of the product, but it does put pressure on prices in the daily market, which means that the market continues to circulate in a difficult circle.