European product prices appear to have bottomed out, with last week’s quotes indicating around €3557 for butter and €2890 for SMP. These levels suggest values for Irish constituents (3.3% protein and 3.6% fat) of about 35c per litre. The Friesland Campina July milk price, again calculated for Irish solids, equates to about 35.9c per litre.

The IDB Purchase price Index (PPI) for June has continued to slide, down to 121.5, a total drop of 9.1% from the December/January high of 133.6. We should remember though, that the current figure represents a market returen level of 21.5% higher than for the 2010 base year.

Despite the seasonal slide on milk supply, production levels remain high across the EU, buoyed by good weather and low feed prices. Lower prices, however, are expected to moderate production somewhat, with the European Commission predicting a total milk supply increase for this year of 2.8%, and a further 2.3% in 2015. The USDA has predicted supply growth of 2.3% for 2014, and 3.2% in 2015. They’ve also, however, predicted a reduction in 2015 milk prices of around 13.5% below 2014 levels.

In general terms, observers note that while demand has remained very strong, supply growth has been significantly stronger, although at a level which is unsustainable. It is thought likely that some level supply disruptions will be seen across the globe, possibly with the development of an El Niño season in the southern Hemisphere.