False dawn for sales of intervention milk powder stocks?

No SMP has been put into intervention since September.
No SMP has been put into intervention since September.
Ciaran Moran

Ciaran Moran

It is understood the EU will reject all bids for the latest tender of its giant stocks of skimmed milk powder in intervention.

The move comes as a disappointment to those in the dairy sector as hopes were raised last month that the 350,000t stocks might be starting to move when the Commission accepted a small tender.

However, according to sources in Brussels this week the 11th tender of the SMP stocks saw all bids rejected with low interest. It is believed there were two small bids with the highest at €1,750/t. This is significantly lower than the €1,850 accepted by the EU last month.

However, dairy traders have noted that spot prices dipped straight away across the globe last month after bids of €1,850 were accepted.

Poor prices in the SMP market have also been cited as one of the big reasons for a butter shortage as companies are unwilling make butter as the process produces approx 2t of skim milk which the must sell in a depressed market.

The overhang of SMP from 2015-16 represents approximately 17pc of annual SMP trade and is 1.6pc of annual EU milk production.

Agriculture and Rural Development Commissioner Phil Hogan told Agriculture MEPs skimmed milk powder remains an issue and added that it is being used by some people in the trade in order to "talk down prices in the market place".

"We are working on proposals and we have learned from the 2009 experience when we had quotas and we had 250,000t in storage at that point even with quotas.

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"We have to manage this well so that we don't drive down the price to the farmer," the Commissioner said.

"We are working with third countries and various schemes are being evaluated to see what we can do to manage this particular issue over the next year or so that will not damage the price to the farmer," he said.

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