EU Intervention butter stocks on course to peak

When the 50,000-tonne limit is reached, a tender system will be activated which will reduce the price at which butter is bought into Intervention, putting further downward pressure on market prices.

So far, 2,504 tonnes of butter have been sold into United Kingdom Intervention stores, and 16,503 tonnes in the Republic of Ireland.

Butter is also being taken off the market under PSA (Private Storage Aid, where butter is put into storage and released during the winter) with an additional subsidy paid to compensate for the seven per cent drop in butter Intervention prices on 1July (limited to 110,000 tonnes).
But, so far, 60,405 tonnes of butter have been put into PSA � around 15,000 tonnes less than last year � indicating that market operators are less confident over the trend of butter prices into the autumn.

Skimmed milk powder Intervention stocks are negligible, having fallen by 36,000 tonnes over the past year as SMP has been sold back onto the market during the winter.

Market prices are still three-eight per cent above the Intervention price but have been falling slowly. For the first time this year, SMP was sold into Intervention in RoI.
Meanwhile, the Department for Environment, Food and Rural Affairs has substantially revised its figures for cheese.

As a result, the total figure for 2005 is 25,000 tonnes (six per cent) lower than was initially reported � and is now reported to be 385,000 tonnes. This means the annual figure was up year-on year � by five per cent and not the 10 per cent that has been initially reported.
Figures have also been revised down by around 4,000 tonnes for the first two months of the year. It appears that the revision has been caused by a processor revising the figures it had been giving to DEFRA during the past 15 months.

As a result, UK cheese production is up by around five per cent, most of it in Cheddar cheese. Even without this revision there have been reports of a build-up in stocks and pressure from increasing stocks in Ireland, where milk production was 20 per cent up on last year for March.
There have also been reports of increasing pressure from supermarkets on prices, with reports of a number of up-coming tenders. This has resulted in cheddar prices falling by around �150/tonne since March, down to around �1,950/tonne.