May 14, 2008

The worst is over for EU dairy price increases

The EU may soon be seeing the end of soaring milk prices and see stability in the commodity, the European Commission said on Tuesday.

Production is going to go up and you can see the impact on market prices, a senior Commission official told reporters.

"In the medium term, it is likely that prices will stabilise at levels much lower than the peak but higher than the very low prices (of the late 1990s)," he said, speaking on condition of anonymity.

Milk prices would be higher even after they have stablised due to the high energy prices and production costs.

Since October 2007, dairy prices had fallen by around 35 percent for butter, by 40 percent for skimmed milk powder and by around 10 percent for cheddar cheese, he said.

The official attributed recent price increases to strong world demand and droughts in Australia.