This week’s Eurex index continues to highlight the strong performance of butter at €4202, a price not recorded on the index since October 2013. Demand for butter remains buoyant, as stocks tighten. However, the SMP index, while improved, is still languishing at €2072. While quantities of SMP offered into public intervention in September has reduced to a trickle, there is now in excess of 350,000 tonnes of SMP in public ownership.

The Ornua PPI is now 92.2, up from 85.8. This reflects higher returns across all of its main products.

However, caution is certainly advised as the GDT index for WMP reduced by 3.8% this week. This is another indicator that the positive signals over recent weeks is due mainly to a drop in milk supply in Europe, Oceania and Latin America, while demand remains sluggish. Milk supply in the US (up 1.9% year to date) continues to benefit from low grain prices, with domestic demand good and the strong US$ tempering exports. Following, last week’s decision by OPEC to cut output, a recovery in oil prices would help demand in countries such as Nigeria, Algeria and Venezuela, but it can be a double edged sword as demand for butter and cheese is strong among big oil users such as the US, Japan and South Korea.

By Eamonn Farrell

Agri Food Policy Executive