Hogan: 'Milk prices will remain stable for the time being'

European Commissioner Phil Hogan expects European milk prices to remain stable for the time being. In order not to put too much pressure on the milk price, Hogan once again advocated the gradual marketing of intervention stocks of skimmed milk powder. However, the necessary volumes were sold in June. 

Hogan announced during the agricultural council last week that European milk prices fell more than usual in the first months of this year. On average, the European milk price is barely above €32 per 100 kilos; however, according to the Irish European Commissioner, this is still an acceptable level for a healthy operating result. Hogan also expects the demand for dairy to pick up.

Butter export is going well
European exports of butter, cheese and skimmed milk powder in the first quarter of 2018 were above the level of last year. The fact that New Zealand has been struggling with the necessary problems for some time, offers additional sales opportunities for the other exporting countries.

Hogan specifically mentions the thriving butter sales. Purely with regard to the butter price, the raw milk raw material value is more than €37 per 100 kilos. This is now also the level at the spot market has been common for some time. At the same time, Hogan points to the problematic sales of skimmed milk powder† According to the European Commissioner, this emphasizes once again that caution is advised when marketing these intervention stocks. 

Hogan has firmly rejected the proposal by French agriculture minister Stéphane Travert to sell intervention stocks as animal feed. According to the European Commissioner, this is financially impossible. Previously, this destination was still a real option for Hogan. 

Intervention sales
Although Hogan calls for caution, intervention sales have increased significantly over the past 3 months. In June, the European Commission sold 23.532 tons of skimmed milk powder from intervention. In total, just under 40.000 tons were offered. The lowest realized price was €1.195 per tonne, while the highest realized amount was €1.400 per tonne. These levels are slightly below current market prices. 

Apart from the volume sold in June, there was still 342.791 tons of skimmed milk powder in intervention last May. At the beginning of this year, the stock was still 378.812 tons. This means that stocks are now finally showing a serious decline.

Wouter Job

Wouter Baan is editor-in-chief of Boerenbusiness. He also focuses on dairy, pig and meat markets. He also follows (business) developments within agribusiness and interviews CEOs and policymakers.

w.baan@boerenbusiness. Nl

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