FDBusiness.com

Dairy Ingredient Prices Could Rise Sooner Than You Think, Warns Leading European Trader

 Breaking News
  • Glanbia Cheese Joint Venture to Build New €130 Million Mozzarella Cheese Facility Glanbia Cheese, the joint venture business between Glanbia plc and Leprino Foods, plans to build a new, world-class mozzarella cheese manufacturing facility in Portlaoise, County Laois, Ireland. A site for the new facility has been identified at the recently established Togher National Industrial Estate in Portlaoise. A total of €130 million will be invested in [...]...
  • PepsiCo Reveals the 10 Finalists Joining its 2018 Nutrition Greenhouse Programme PepsiCo has announced the 10 entrepreneurs that will form the second class of its health and wellness incubator in Europe. First launched in 2017 to support the next generation of food and beverage entrepreneurs, the PepsiCo Nutrition Greenhouse programme offers each of the 10 participating companies a €20,000 grant, and access to PepsiCo mentors and experts to take [...]...
  • PureCircle Increases Capacity to Supply Reb M PureCircle, the world’s leading producer and innovator of stevia sweeteners, has announced that its recent advances in expanding capacity now enable it to supply significantly more Reb M to global beverage and food companies. Using beverage sweetening as an equivalized example, PureCircle can now supply enough Reb M to sweeten about 500 million cases of zero-calorie [...]...
  • Introducing the Propack Synchronized Staging Transfer Model PSST/120 Propack has announced a new, economical, safe product delivery system that uses stepper servo technology to receive randomly presented products from baggers, pouchers and flow wrappers to synchronise product delivery to high-speed cartoning machines. With a maximum packing rate of 120 packs per minute (PPM) to 80 twin PPM (depending on product size), the PSST/120 [...]...
  • Bel to Produce Mini Babybel at its First Canadian Factory Bel Group, a world leader in branded cheese and a major player in the healthy snack market, plans to build its first Canadian plant in Sorel-Tracy, Quebec. The facility, which is scheduled to begin commercial production in early 2020, will be fully dedicated to producing Mini Babybel® cheese. These dairy snacks encased in small and [...]...

Dairy Ingredient Prices Could Rise Sooner Than You Think, Warns Leading European Trader

Dairy Ingredient Prices Could Rise Sooner Than You Think, Warns Leading European Trader
April 08
11:38 2016

Dairy commodity prices have hit the floor and food manufacturers should lock into a long-term deal quickly before they rise again, one of Europe’s leading traders has warned. Market prices for dairy commodities are currently at a 10-year low. The European Commission is already buying up skimmed milk powder through its Intervention Scheme to prop up the market, and is expected to extend this measure to butter in the next few weeks.

According to Belfast-based Greenfields Ireland, as soon as a market balance is achieved prices are almost certain to start rising again. This means now is the perfect time for food manufacturers in Europe to lock into a fixed-price deal for their dairy ingredients using a long-term pricing model.

“Do this today, and it will be possible to benefit from low prices and insulate your business from the extreme price volatility that’s been a characteristic of the European dairy ingredients market over the past decade,” says Ian Thomas, Managing Director of Greenfields Ingredients, the UK division of Greenfields Ireland.

“For companies in the bakery, confectionery and ready meals categories, who often use large volumes of dairy ingredients, this is an opportunity that’s simply too good to miss. Wait too long, however, and it could be too late. Intervention by the European Commission will take excess supplies of milk out of the market, and product prices will soon start to creep up.”

GreenfieldsChicagoMercantileExchangeCompressedDairy ingredients are cheap right now because there is too much milk in the market and not enough demand for it. In Europe this has been caused largely by the abolition of milk quotas, which previously put a cap on how much milk dairy farmers were allowed to produce. With EU-wide quotas consigned to history, dairy commodities are exposed to free market forces – and right now those forces have sent prices crashing to the floor.

However, according to Ian Thomas, prices will not stay low for long. “Now is the time to consider locking into a long-term pricing model,” he explains. “This will give you the assurance of knowing that when prices eventually rise, which we expect them to do in the second half of 2016, the price you pay for your dairy ingredients will be more favourable than that available on the market. Considering the pressure major retailers put on their suppliers to keep a lid on raw material costs, the peace of mind this offers could prove to be invaluable. While your competitors are pulling their hair out at the prospect of an upswing in ingredient prices, you’ll enjoy the benefits of cost protection.”

He adds: “We are particularly anxious that bakers, confectioners and ready meal producers explore our pricing models before prices start to rise again.”

Greenfields Ireland has developed a range of pricing models that offer a straightforward way for food manufacturers to fix dairy commodity prices at today’s low levels. The company trades in EU dairy futures on the European Energy Exchange (EEX), the Chicago Mercantile Exchange (CME) and the New Zealand Exchange (NZX), which gives it the ability to hedge dairy commodities to the benefit of its customers.

This approach is combined with sustainable milk price contracts for Greenfield’s farmers, which typically extend over three to five years. This gives its suppliers more certainty over selling prices, ensuring its supply chain is sheltered from excessive risk.

About Author

mike

mike

Related Articles



Food & Drink Business Conference & Exhibition 2016

Upcoming Events

  • September 5, 2018Int'l Food Products and Processing Technologies Exhibition (WorldFood Istanbul)
  • September 15, 2018iba
  • September 25, 2018PPMA Show 2018
  • September 27, 2018Int'l Fruit Show (eurofruit)
AEC v1.0.4

find food jobs

The Magazine

F&D Business Preferred Suppliers

New Subscriber





Subscribe Here



Advertisements