Weekly dairy market update (18-22 May)

Friday, 22 May 2020

By Patty Clayton

Markets saw further improvements this past week, driven by reduced milk availability as much as improved demand. The main source of the upward pressure has come from the continent, where dry weather in Germany has affected milk deliveries, although GB deliveries fell in the past week as well. This has come at the same time as catering businesses have started replenishing stocks, boosting demand. The UK has benefitted from summer like weather pulling up retail sales of cream and ice cream, and a weaker pound relative to the Euro, making exports more competitive.

Higher demand for fats was the main driver of higher spot prices this week, with cream prices moving up through the week. Quotations were mostly in the range of £1.15/kg to £1.25/kg, although there some reports of prices approaching £1.30/kg. Spot milk prices also increased, trading at between 24ppl to 25ppl.

With pressure on fats markets, quotes for butter rose by £100 - £150 per tonne on last week, partly pulled up by currency. Again, the key driver here was strong demand on the continent where retail sales of butter are reported to be brisk. PSA has also taken product off the market, with applications for just over 24,000 tonnes of butter made in the first two weeks of the scheme.

Skim milk powder (SMP) prices also jumped up last week, with quotes between £1,700- £1,800/tonne. While availability is not thought to be tight, the imminent opening of foodservice on the continent has brought buyers back to the market looking to secure product.

Patty Clayton

Lead Analyst - Dairy

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