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ICOS Markets Commentary
ICOS Markets Commentary

The European Commission is adopting a cautious approach as it begins the process of releasing skimmed milk powder (SMP) out of intervention. Prior to Christmas, the Commission agreed to release only 40 tonnes out of 22,000 tonnes on offer, with the minimum selling price set at €215.10/100kg.


Commodity Prices


Commodity prices for January 2017

Following the most recent tender which closed on 3rd January, the Commission received bids for a total of 11,914 tonnes, but the price range was too far from the current market price for the Commission to accept any of the bids. A third tender for the sale of 21,952 tonnes of SMP that entered intervention before 01 November 2015 is open with 17th January next as the deadline for submitting offers.

Meanwhile, the latest EEX Index for SMP is €2,153/tonne, in line with the minimum selling price set by the Commission. Furthermore, the EEX Index for butter remains strong at €4,353.

The Ornua Purchase Price Index for December continued its positive trend over recent months at 103.8, up from 99.4 reflecting higher returns across all products.


Ornua Purchase Price Index (PPI)


Ornua Purchase Price Index

In 2016, the value of Irish dairy and ingredients exports increased by around 2% to €3.38 billion. The value of dairy exports to international markets grew by 19% year on year with exports to the UK back by 10% and exports to the rest of Europe fell by 6% year on year.

Distribution of Dairy Products

Distribution of Dairy Products

The value of cheese exports declined by around 4% in 2016 to €675 million. The UK accounted for over 50% of cheese exports and trade into that market is estimated to have shown a double digit decline due to unfavourable exchange rates.

Overall, the Euro strengthened by 13% against sterling in 2016, with sterling volatility reducing the value of Irish agri-food trade by a potential €570 million last year alone according to Bord Bia.

Tags: Bord Bia, EEX Index, European Commission, Ornua Purchase Price Inde, SMP