November 27, 2009

EU dairy market improves over export refunds removal 

EU milk market managers have removed all remaining export refunds on dairy products - an indication of the improving global market.

In October, the EU Commission set skimmed milk powder export refunds at zero, and earlier did the same earlier this month for whole milk powder, condensed milk and cheese. It has now removed the remaining subsidy for butter and butter oil, meaning all exports must compete unaided.

The decision was done as part of the deal to create an EU emergency milk fund of 300 million euros (US$447.90 million). The EU Commission's original plan was to set the fund at 280 million euros, but the European parliament wanted more. The decision was taken to increase it by 20 million euros, but with the money coming off export refunds.

Addressing farm ministers in Brussels last week, EU agriculture commissioner Mariann Fischer Boel said that EU butter and SMP prices were 29 percent and 23 percent above their respective intervention prices, while EU cheese was 11 percent above its June value. Since June, world market prices have increased between 40 percent for cheese and almost 80 percent for butter, she said.

US$1 = EUR0.66 (Nov 27)