DAIRY

Markets were already showing some signs of weaker demand World trade untroubled so far by terrorist crisis There is little sign yet that dairy markets in the UK, the EU and across the world are being affected by the state of war declared by the US and its allies. This is partly because the share of milk and milk products traded on the world market, ie crossing national frontiers (counting the EU as one), is relatively small at about 6% to 7% of world dairy output. In simple terms, most milk and dairy products are consumed close to where they are produced. Some countries, like Australia and New Zealand, are more dependent on world markets than others, but there are no reports yet from those areas of trade being disrupted or of buyers holding off. Trade with Arab countries is important to some exporters, particularly as rising milk and milk product consumption in those countries is heavily dependent on imports. But again trading patterns have remained normal during September. One difficulty in spotting any depressing effects is that world dairy markets were already showing some signs of weaker demand as talk of recession leads to expectations that market prices might fall. World market butter prices had already eased from July to September by about $50 per tonne, or about 4%, whilst skim milk powder prices were down by a similar amount, or about 2%, over the two months. These are trends which reflect the supply and demand balance throughout the world and probably have nothing to do with more recent problems. {{CANNED GOODS }}