The Mintec Category Index (MCI) for EU dairy has maintained an upward trend since the beginning of 2021, rising by 5.6% in the four weeks to 27th October 2021, reaching EUR 3,628/MT. The EU cow’s milk production is expected to tighten during Q4 2021 due to challenging weather and high feed costs. Thus, the European Commission has cut the milk production forecast for 2021 in their latest outlook to 0.3% year-on-year, adding upward pressure on dairy prices in the EU.
Butter prices of the EU Dairy MCI soared by 20% month-on-month (m-o-m), a jump of EUR 149/MT. Tightness in the EU butter supply, attributed to a low availability of cream which is driving EU cream prices up, is the main bullish factor. The EU butter production during the Jan-Aug ’21 period was down 1% year-on-year (y-o-y).
Both skimmed milk powder (SMP) and whole milk powder (WMP) prices of the EU Dairy MCI surged in October due to a strong appetite from China, healthy domestic consumption and a significant drop in production between January and August, down by 2.4% and 6.4% y-o-y respectively.
Cheddar prices, the largest component of the EU Dairy MCI, marginally increased by 0.6% in October. According to market participants, export demand has improved, but cheese production remains plentiful with a 1.7% y-o-y increase during January-August 2021, preventing prices from increasing further.