European Agriculture Commissioner Phil Hogan has expressed confidence in continuing dairy recovery driven by butter and cheese, and called on processors to play their part in meeting market demand.

Following the opening of a tender last week to start releasing the 350,000t mountain of skimmed milk powder (SMP) stored into EU intervention during the past year’s dairy crisis, Hogan said this Friday that the move would not dampen the recent rally on dairy markets.

There is no reason to think that such a move will prevent milk prices from reaching sustainable levels

“Some of you may say that my recent decision to open the sales compromises the recovery taking place on the protein market,” he told milk processors at the European Dairy Association congress in Nice, France. “But I can tell you that as long as butter and cheese prices remain remunerative, there is some margin for SMP to be more competitive on the world market. And certainly there is no reason to think that such a move will prevent milk prices from reaching sustainable levels, especially given that quotations for other dairy products remain high.”

Hogan cited the forecast by the European Commission’s Milk Market Observatory that prices for butter and cheese are expected to remain robust through early 2017.

The Observatory’s latest figures show that volumes of SMP, butter and cheese placed under Private Storage Aid – the other EU scheme to remove excess commodities from the market – are now all in decline, as more products come out of the schemes than go in.

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