EU-28 Intervention Stocks Update – Jan ’18
Executive Summary
Market tools including private storage aid and intervention schemes have been made available to European dairy producers and processors since the announcement of the Russian dairy import ban in Sep ’14. Highlights through the final quarter of 2017 include:
- EU private storage aid stocks of butter, cheese and skim milk powder continue to be drawn down following the closures of the schemes in late 2016 and early 2017. Combined private storage aid stocks of butter, cheese and skim milk powder were drawn down to virtually nonexistent volumes through the end of Dec ’17, finishing 98.9% below the highs experienced during Aug ’16. Private storage aid of butter and cheese has been closed since the end of Sep ’16 while the skim milk powder private storage aid scheme was closed at the end of Feb ’17.
- Similarly to private storage aid, the intervention scheme for butter closed at the end of Sep ’16. A new SMP intervention campaign was opened at the beginning Jan ’17 but closed at the end of Sep ’17, despite EU skim milk powder prices remaining below intervention trigger prices. SMP intervention stocks reset at the beginning of 2017 with a new limit of 109,000 tons and 30,600 tons were offered into the scheme as of the closure of the scheme at the end of Sep ’17. A new SMP intervention scheme will open at the beginning of Mar ’18, however purchases will be made through a tendering procedure on a case-by-case basis and without a fixed trigger price. Such a process will allow the European Commission to limit or avoid any further stock accumulation.
- Significant quantities of SMP intervention stocks purchased throughout 2016 continue to hang over international powder markets. The European Commission began to offer skim milk powder intervention stocks up for sale during Dec ’16 via a tendering process however just 0.2% of the product sold. 15 additional tending processes have taken place since, with just 2.1% of the total offered product being sold. Bids have been rejected as they were too far from the prevailing market prices.