Considerably increased production of butter and SMP, termination of deliveries to Russia and inadequate attitude of Agrarian Fund (absence of promised purchases) influence formation of very low prices for the product in Ukraine.
Though the production of butter slightly decreased last month, it was by a quarter higher in comparison with July 2013. 12.5 ths t of butter were produced last month. Manufacturers of cheese product were the largest producers of butter on the market.
A number of operators hope for deliveries of butter to Belarus. They believe that Belarusians will sell out the products to Russia, and will import them for domestic market, and first of all from of Ukraine, if, of course, President Lukashenko does not be afraid of Russia.
Because of strongly decreased prices of milk powder on world market the Ukrainian exporters remain almost without buyers. The new prices of demand shocked them. Most of vendors do not want sell the products at such low prices.
Western traders value Ukrainian SMP at about USD 2500/t. They threaten that the price will be even lower soon. Large sellers refuse such low prices, and small operators will probably agree to them. Devaluation of the UAH partially compensates the losses, and they need current assets.
Many producers do not see profitability in production of milk powder, because of low demand of traders. Now volumes of the production are reduced. Still recently the production was quite active. 9.2 ths tonnes of SMP were produced last month. That was by 46% more than in July 2013. Production of WMP remained low, a bit more than one thousand tonnes a month.