Market Report - August 2013

Posted 01 August 2013

"Both Cream and Butter rise in price again this month."

EXCHANGE RATES

Against the $, Sterling opened the month at 1.55 and is down slightly at 1.51 as at 11th July.
Against the €, Sterling opened the month at 1.173 and continued to slide down, ending at 1.156 on the 11th July.

CRUDE OIL

Energy prices fell weighed down by concerns that demand may fall if the US Federal Reserve stops its quantitative easing amidst improving economic landscape in the country. Brent crude oil on ICE London fell 4% and road fuel prices were mixed, with EU petrol up 1% and EU diesel down 4%.

FATS AND OILS

Higher soyabean production and exports from South America have weighed on soyabean oil prices. Global soyabean production is expected to rise in 2013/14 to 285.3 tonnes, an increase of 7% yoy. Soyabean and Rapeseed oil fell 8% in Rotterdam as strong crops are forecast in the EU, Ukraine and Canada. Sunflower oil prices were mixed this month as prices fell in Rotterdam 1%, but rose in Russia by 4%.

Palm oil prices rose in Malaysia by 5% and Indonesia by 1%, driven by higher demand for festive food in the build-up to Ramadan. For lauric oils, coconut oil rose in the Philippines by a staggering 20% and Palm kernel oil rose in Malaysia 5%.

Extra virgin olive oil prices rose in Spain and Italy by 4%.

WHEAT

Grains prices were generally lower this month weighed down by expectations of recovering global supplies in 2013/14. Milling wheat prices fell in the US by 7%, France 8% and Germany but rose in Australia by 3% and Canada 1%.

DAIRY

Wholesale markets continued to be driven by supply considerations, with most products seeing some further upward price movements in June. Demand remains rationed, with buyers only coming back to fill short term requirements. Average UK daily milk production for the June remained below 3-year average levels, sustaining pressure on available supplies for manufacturing.

Cream prices rose by £80 /tonne as markets continued to be driven by limited supplies. Demand steadied into mid-June in reaction to rising prices although the beginning of the soft fruit season brought buyers back to the market near the end of the month, adding further pressure to prices.

Butter prices rose by £50/tone and markets remained firm, but saw relatively smaller rises than cream as buyers remained hesitant to cover anything except short term requirements. With cream prices high through the month, demand for fats to be used for butter production softened, inhibiting any significant price increases.

SMP prices remain unchanged in June, with markets remaining steady. Although demand softened with buyers resistant to recent high prices, there have not been reports of any downward momentum in the market. Cheddar markets have moved upwards, with wholesale prices for both mild and mature Cheddar increasing during June. Strong returns on alternative dairy products have limited the amount of milk going into cheese production, keeping stocks tight. Mild Cheddar prices increased by £50/ tonne and mature by £150.

INGREDIENTS

In the cocoa market, prices fell on LIFFE by 4% as a result of a price refund introduced by Ivory Coast to accelerate demand for its under-sized cocoa beans. Cocoa butter fell 2% and cocoa powder by 6%.

Philippine desiccated coconut rose by 10% following an improvement in demand.

Sultanas increased further, as the poor crop condition is clear to see. It is expected that prices will remain high for the season and not likely to ease too much as we enter the new season.


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