Milk powder prices remain high

Skim Milk Powder (SMP) currently stands at €2,240/t and
whey powder at €1,030/t on the Dutch official quotation, with market prices
reported well above these levels, he says. According to Neville, the unprecedented run of high milk
prices over the past 18 months had been driven by strong economic growth in
the Far East. Last year’s drought in Australia also had badly affected milk
production, with levels forecast to be 10% down on the
year.

Strong EU internal market
In Europe, lower
production, a strong EU internal market and the diversion of milk to maintain
cheese and liquid milk supplies had reduced the availability of SMP for feed, as
well as increasing price pressure on whey powder products,” Mr Neville
said.
“As far as the whey powder market is concerned, prices have continued
to strengthen on the back of these high SMP prices. Exports of all whey products
in 2006 continued to grow on the year, including whey powder and lactose.”

“Looking at the current markets our view is that relatively high milk powder
prices will be sustained well into 2007 simply because the main suppliers to
world markets are experiencing shortages.”