[PPT] - Milk market situation 1. Milk Prices 2. Production 3. Prices, PowerPoint Presentation

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Milk market situation

Klaas Johan Osinga kjosinga@lto.nl, @KJOsinga

1. Milk Prices
2. Production
3. Prices, futures,

indices

4. Conclusions
5. Farmers’ sentiment

June 28, 2019

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1. The big picture....

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ASF is reducing China’s and Vietnamese pig herds at an alarming rate. Total reduction in Chinese pork herd 25%. China is responsible for 50% of global pork production. A 25% reduction equates to 12.5% of world output. China seeks to replace lost output. Chinese beef imports have rocketed. In April, China imported 130,000 tonnes, up 75% compared to April 2018. Chinese beef prices were up 8% in April. Rabobank: “Further escalations in beef prices could trigger accelerated culling of dairy cows, which would then stall milk production growth in China, resulting in greater imports”

Picture taken in Vietnam, June 12 African Swine Fever impacts on markets

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http://milkprices.nl/

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2018 was an average year

35.42 34.23 26 28 30 32 34 36 38 40 € per 100 kg

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Milk prices 2018 and 2017

Company Country 2018 2017 2018-2017 2018/2017 National currency Granarolo (North) IT 38.36 1 39.81 1

1.45
3.6%

Valio FI 36.74 2 36.64 4 0.10 0.3% FrieslandCampina NL 36.07 3 38.56 2

2.50
6.5%

Arla Foods DK DK 35.48 4 36.46 5

0.98
2.7%
2.5%

Royal A-ware NL 35.13 5 37.95 3

2.82
7.4%

Sodiaal (Pas de Calais) FR 34.93 6 34.37 10 0.55 1.6% Danone (Pas de Calais) FR 34.55 7 34.47 9 0.08 0.2% Lactalis (Pays de la Loire) FR 33.98 8 33.55 16 0.43 1.3% Hochwald Milch eG DE 33.74 9 34.08 14

0.35
1.0%

Savencia (Basse Normandie) FR 33.69 10 33.93 15

0.24
0.7%

Müller (Leppersdorf) DE 33.02 11 35.38 8

2.36
6.7%

DMK Deutsches Milchkontor eG DE 32.91 12 35.65 7

2.74
7.7%

Dairygold IE 32.75 13 34.26 13

1.51
4.4%

Milcobel BE 32.72 14 35.75 6

3.03
8.5%

Dairy Crest (Davidstow) UK 32.67 15 32.65 17 0.02 0.1% 1.0% Glanbia IE 32.59 16 34.31 12

1.72
5.0%

Kerry Agribusiness IE 32.51 17 34.31 11

1.80
5.3%

Average milk price 34.23 35.42

1.19
3.4%

Emmi CH 48.25 51.88

3.64
7.0%
3.1%

Fonterra NZ 29.40 31.63

2.24
7.1%

0.3% USA class III US 31.49 36.22

4.73
13.1%
8.4%

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LTO milk prices average

av. 12-16

2017 2018 2019 30 31 32 33 34 35 36 37 38 €/100 kg

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Farm gate milk prices € per 100 kg standardised milk

milkprices.nl

Dairy Company April 2019 Rank Rolling average (12 months) Rank Changes in May/June Most recent profit payment GRANAROLO (North) ITA 38.84 1 37.96 1 FRIESLANDCAMPINA NLD 35.48 2 35.66 2 +0.50; -0.75 0.57 SAVENCIA (BASSE NORMANDIE) FRA 34.94 3 34.16 7 VALIO FIN 34.91 4 34.91 4 0.92 LACTALIS (PAYS DE LA LOIRE) FRA 34.50 5 34.56 5 DANONE (PAS DE CALAIS) FRA 34.37 6 34.49 6 SODIAAL (PAS DE CALAIS) FRA 34.09 7 34.93 3 0.23 ARLA FOODS DK 32.63 8 33.26 9 0.00, 0.00 2.30 MÜLLER (LEPPERSDORF) DEU 32.47 9 32.48 8 HOCHWALD MILCH eG DEU 31.94 10 32.82 7 0.02 MILCOBEL BEL 31.72 11 33.15 10 0.24 DMK DEUTSCHES MILCHKONTOR eG DEU 31.71 12 32.91 11 KERRY AGRIBUSINESS IRL 31.41 13 32.39 13 DAIRY CREST (DAVIDSTOW) UK 30.93 14 32.66 12 DAIRYGOLD IRL 30.80 15 32.01 14 GLANBIA IRL 30.68 16 31.83 15 0.40 VREUGDENHIL NL Average 33.21 33.76 EMMI CH 47.38 49.36 FONTERRA NZ 29.43 29.02 USA Class III (USDA) USA 35.89 32.78

Deliveries 1 million kg / year, 4.2% fat

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Comparison of milk prices has become more difficult

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Value for money?

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2. Milk production

New Zealand 2018-2019: +2.3%

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Milk production (2)

Australia: 2018-2019 -7.7%

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Production Mercosur (3)…

2018:

Argentina production +4.2% year-on-year
Uruguay production +7.2%

Mostly H1 2018! 2019 first quarter:

Argentina production -6.3%
Uruguay production -9.1%
Brazil: +3%, but imports +23% Jan-April 2019

Expectation: less exports from this region in 2019

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Milk production (4)

United States: no growth! USDA (y-o-y): March:

0.6%

April: +0.1% May:

0.4%

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Milk production (5)

EU – latest data:

Germany France UK Netherlands Ireland Portugal Belgium Lithuania Finland Austria Slovenia

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Germany & France milk production (year-on-year)

Week Germany France Week 24

1.0%

Week 23

0.8%

+0.3% Week 22

0.6%

+0.2% Week 21

1.9%
1.0%

Week 20

1.4%
1.0%

Week 19

1.3%
0,4%

Week 18

1.0%

Week 17

0.7%

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Great Britain (y-o-y)

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Netherlands milk production

Jan-May 2019:

2.7% (milk)
2.3% (fat)

May 2019:

2.5%
0.3% (fat)

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Lithuania

Milk prices May 27.9 ct/kg (-7,3 % on April 2019) Production in May: 119m kg, -5.8 % on May 2018, Production January - May: -0.9 % y-o-y “Costs are increasing because of severe drought this year. In Lithuania drought rises for a second spring in a row. “

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Belgium

Production: April +3,5% production year-on- year January-April +1.9%

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Finland

Production: January-May: 966m litres, incl organic milk (-1.0%). Estimate for 2019 is 2,251m litres, -1.5% Average producer price 37,60 c/l “In the 1st quarter of the year 2019, feedstuffs were 12% more expensive than a year before. The costs

f fuels increased by 5%, fertilizers by 3% and

electricity by 11%. “ Source: MTK

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Portugal

Production: -2% for the months January-April 2019

n the same months of 2018.

Trend: slight decrease Milk price: € 31.32/100 kg (mainland) Price trend: stable

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Slovenia

Production in April: 46.8m kg (-2.6%) Lower production since June last year, slowly recovering. Slovenia had no issues with the last year’s drought, corn yield was extraordinary, problems with cereals because of too much moist Milk price: 32,40 ct/kg (April, +13,4 % year-on-year). This year’s prices are in average 9 % higher than last year…

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Austria

Prices:

Average Price:

37.84 ct/kg

GMO free Quality:

35.25 ct/kg

Organic Milk:

45.13 ct/kg

Hay milk:

39.60 ct/kg

Organic Hay milk:

49.48 ct/kg

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Ireland: +11.8% (Jan-April

“Massive increase in 2018 production costs due to weather related fodder shortages. 2019 expected better as production conditions (weather) thus far has been very favourable. Significant increases in unit prices, especially of feed, but also fertiliser, energy in fuel in the last 12 months.” Source: IFA Expectation for the year 2019 of 5.5% increase to 8,000m litres.

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Summary EU milk production

Growth in Poland, Belgium, UK, Ireland No production growth

r less milk in France,

Netherland, Germany, Italy

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Milk production 2019

Calender year 2019 (billion kg milk) EU + 1.5 (= +1%) USA + 0.5 (= +0.5%) New Zealand + 0.4 (= +2.0%) (2019/20) Australia

0.2 (= -1%)

Argentina + Total + 2.2 billion kg – low! (Volume of world market is about 60 bn kg)

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Very modest milk production growth….

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3. CME Chicago (28 June) Class

III contract Dec 2019

17,22 US$ per 100 cwt is € 33.50 per 100 kg (3,5% fat)

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Some dairy quotations

ZuivelNL quotations June 26, 2019: Butter, 25 kg cartons:

€12.00 € 368.00

WMP, 26% fat:

€ 10.00 € 276.00

SMP extra quality:

€ 3.00 € 204.00

SMP feed quality:

€ 2.00 € 187.00

Whey powder:

€ 4.00 €

67.00 Cheese Edam/Gouda: Hannover € 2.90-3.20 (stable, 26/6) Milk spot price (DCA) € 0.335 (+0.015) (week 25) Ife-Rohstoffwert € 32.00 (+1.40) (4% fat, May 2018)

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4. Conclusions

Situation in balance mid- 2019 – gap between proteine and fat closing Not much milk production growth but milk price development is disappointing, has global demand stalled? Impact of ASF in Asia on global food markets will be considerable Brexit is going to last beyond October 31 (Halloween) ….

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5. Dutch farmers’ confidence

Q1 2019

5

5 10 15 20 25 30 35 Index

Agro Vertrouwensindex

Totaal land- en tuinbouw Akkerbouw Glastuinbouw Opengrondstuinbouw Melkveehouderij Varkenshouderij Pluimveehouderij

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