Commodities Bulletin #8

The major commodities markets are under the spotlight as a valuable resource for devising buying strategies, with the continued deflation of prices on powders, butter and spot milk.

On average, between March and April: the price of butter - 2.6%, the price of skimmed milk powder -7.8% and the price of whole milk powder -2.4%. The price of German spot milk and Italian spot milk also fell (with a premium of about €6/100Kg over German).

More rigidity on Italian cheese quotations, affected by the barn milk price agreed until June at 575 €/100lt.

Demand, in an uncertain macroeconomic environment still characterised by inflation and restrictive monetary policies, has not yet triggered a clear recovery trend:

• • Chinese demand is still relatively low;

  • The month of Ramadan (23 March - 21 April) further slowed demand;

  • EU traders maintain short hedging strategies;

  • EU exports are further slowed down by the strengthening euro.

At the same time, there was also an improvement in supply from the main producing countries. In Germany, milk deliveries in March were 3.3% higher than in the same period last year.

It is expected, however, that in the medium to long term the recovery of Asian and domestic demand and the risk of energy price increases will drive up prices.