Butter Price Progression

(1)

European Dairy Market Overview

17 Dec 12

As the markets wind down with the

approach of Christmas, last week saw

the quotations flat to higher. Butter

saw further gains last week, up by €17

(0.5%) to €3440, with all the work

be-ing done by the French quotation, up

by €50 on the week to €3500. The

Ger-man and Dutch quotations held steady

at €3350 and €3470 respectively. This is

now the eight week that the German

butter quotation has now remained at

€3350, while the Dutch and French

quotations have been moving upwards

and leaves a €150 spread between the

three quotations. Last week’s

move-ment leaves butter down by 2.3% (€80)

for the year to date.

After six weeks of declines the SMP

quotations were unchanged last week,

holding at €2655, with Germany

regis-tering €2650, France €2675 and the

Netherlands €2640. This puts SMP up

14.4% for the year to date but down

3% (€83) from the highs made in late

September.

After moving up by €50 in previous six

weeks, the whey quotations remained

unchanged last week at €990, with

Ger-many at €970, France at €990 and the

Netherlands €1010. This puts the whey

quotations up by 5.3% for the year to

date and just 2% (€23) off the highs of

the year registered in early September.

Last week saw activity on the Eurex

butter and SMP dairy futures with 30

contracts (150 tonnes) in total trading,

split evenly between the butter and

SMP contracts.

The butter contract traded all 15 lots

on Monday with 10

lots trading in Jan13

all at €3355 and a

further 5 lots in

Apr13, trading at

€3200. The SMP

trades were focused

on the latter end of

the week, with all 15

lots trading on

Thursday with 5 lots in Feb13 at €2630

and a further 10 lots in Apr14, all

trad-ing at €2630.

The butter contract settled mixed along

the forward curve, with front month

Dec12 up 2.2% to €3475 and Jan13 up

1.1% to €3388. Feb13 and Mar13 saw

the downward movement down by

0.74% and 1.5% to €3338 and €3275

2000

2500

3000

3500

4000

4500

Jan 11 Apr 11 Jul 11 Oct 11 Jan 12 Apr 12 Jul 12 Oct 12 Jan 13 Apr 13 Jul 13

€

p

e

r

to

n

e

Butter Price Progression

Eurex Futures Curve (Interpolated)

DE/NL/FR Historical Prices

340 360 380 400 420 440 460 480 500 520

Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar

D e liv e ri e s (m ill io n s litr e s p e r we e k)

French Weekly Milk Collection

2009/10 2010/11 2011/12 2012/13

(2)

respectively, while Apr13 moved up by

0.78% to €3225. This puts the butter

forward curve in a constant inverse

from Dec12 to Apr13 moving into

in-creased European production, with

Apr13 at a discount of €250, up from

€200 the previous week.

SMP settled flat to higher, with front

month Dec12 up €38 (1.45%) to €2663,

while Jan13 remained unchanged at

€2650. Feb13 was up 1.4%, with Mar13

flat and Apr13 up 2.9% to €2650. This

takes away much of the inverse in the

SMP forward curve from Dec12 to

Apr13, reducing the spread from €75 to

€38. Whey showed little price

move-ment on the week, with Dec12 down

€2 to €1003 while the majority of the

forward curve held steady.

Butter continues to moves strongly out

of the EU private storage scheme.

Re-cent figures released by ManCom

show that between the 22nd

Novem-ber and the 13th DecemNovem-ber, 16,011

tonnes left the scheme. This leaves

33,285 tonnes of butter in store, par

with the last three years for this stage

in the scheme, following a rapid draw

down of stocks from September

on-wards. This year saw 133,427 tonnes of

butter offered into the scheme, the

highest level since 2009, and 26%

above 2011.

In a report released last week , the EU

commission said that it’s expects a ‘soft

landing’ with the abolition of milk

quo-tas. For the majority of member states

the milk quotas are no longer

re-stricting production and milk quota

price is at or approaching zero, with the

EU as a whole 6% under quota in

2011/12 and only six of the 27 member

states hit with super levy fines.

The next GDT auction takes place

to-morrow, Tuesday 18th December,

starting at 12:00 GMT. Tomorrow’s

auction has a total of 45,400 tonnes of

Fonterra product on offer, down 10.8%

from the last auction but in line with

previous forecasts. WMP sees the only

change from the last auction, down

5,500 tonnes (15.5%) to 30,000 tonnes.

Contracts 1 and 2 see all of the

differ-ence, with no volume in contract 1

(removing 5,000 tonnes) as per normal

for the second auction of the month

and contract 2 reduced by 500 tonnes

to 15,500 tonnes. The WMP 12 month

forecast has been increased by 10,000

tonnes (1.8%) to 548,000 tonnes.

SMP sees no change

from the last

auc-tion with 6,625

tonnes of Fonterra

product on offer,

with contract 2,

February, with

3,125 and March

1,625 with the

re-Oceania Market Overview

0 20 40 60 80 100 120 140 160

Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar

St o ck s ( '0 0 0 t o n n e)

EU Butter Private Storage Stocks

07/08 08/09 09/10 10/11 11/12 12/13 Source: DG Agri, DairyCo

Sales Group Maximum Supply (MT)

Jan-13 Feb-13 Mar-13 Apr-13 May-13 Jun-13 Total % Change Contract 1 Contract 2 Contract 3 Contract 4 Contract 5 Contract 6

Anhydrous Milk Fat (AMF) - 1,950 1,250 975 750 250 5,175 0.0% Butter Milk Powder (BMP) - 200 - - - - 200 0.0% Cheddar (Ched) - 1,100 850 400 - - 2,350 0.0% Milk Protein Concentrate - 280 130 130 - - 540 0.0% Rennet Casein (RenCas) - 250 210 90 - - 550 0.0% Skim Milk Powder (SMP) - 3,125 1,625 875 500 500 6,625 0.0% Whole Milk Powder (WMP) - 15,000 8,000 4,500 1,500 1,000 30,000 -15.5%

Source GDT, NZX

GDT 18th December Offer Quantities (Fonterra) Shipment Months at Seller Ports

0 10 20 30 40 50 60 70

Jun 08 Dec 08 Jun 09 Dec 09 Jun 10 Dec 10 Jun 11 Dec 11 Jun 12 Dec 12

to n n e s ('0 00)

(3)

mainder spit between April – June. AMF

has a total of 5,175 tonnes on offer,

with 1,950 tonnes in February and

1,250 tonnes in March. AMF sees an

increase in forecast volume for the next

12 months, up 1.2% (1,300 tonnes) to

106,628 tonnes. Cheddar sees 2,350

tonnes available, split over three

con-tract months, February – April.

Febru-ary sees 1,100 tonnes, with March and

April 850 and 400 tonnes respectively.

Last week saw a total of 275 lots of

dairy futures trade on the NZX

ex-change, all of them in the WMP

con-tract. Volume was firmly focused in Q1

and Q2 if 2013 with 100 lots each

trad-ing in Feb13 and Mar13, while Apr13,

May13 and Jun13 each traded 25 lots to

put open interest out the full strip of H1

2013.

NZX futures settled the week flat to

higher for the most part, with Dec12

WMP unchanged at US$3180, with

Jan13 and Feb13 also remaining

un-changed. The end of Q1 and Q2 saw all

the price movement, with Mar13 –

Jun13 shifting to keep a relatively

con-stant carry in the forward curve out to

Jun13.

Latest data shows that New Zealand

milk production for October was up

3.4% on October 2011 at 242,746

tonnes of milk solids. This puts milk

solids production for the season

starting June at 569,823 tonnes, up

6.4% on 2011/12 . While remaining at a

high level, production is falling back

from the high % gains seen for the first

four months season. At the same time

last year, milk production was running

10.7% above 09/10 for the year to

Oc-tober and was up 11.4% for the full

year.

New Zealand’s Ministry for Primary

In-dustries recently published Situation

and Outlook places 2012/13 milk

pro-duction at the same levels as the record

breaking 2011/12 season. Milk yield per

cow is forecast to decrease but

in-creased cow numbers are projected to

offset this holding overall production at

2011/12 levels. Similar to a recent

USDA report, the major underlying

as-sumption is that average climatic

condi-tions will prevail for the remainder of

the 2012/13 season. Given that for the

June to October period milk solid

pro-duction was up by 6.2% this means an

expectation of production levels in the

second half of the season below the

2011/12.

Recent generally cold, dry and windy

conditions have reduced available soil

moisture across New Zealand with most

of the North Island and the northern

half of the South Island seeing rainfall

substantially below normal. Lower soil

moisture and cooler conditions is

im-pacting on grass growth with the

pas-ture growth index falling substantially

over the past month. Lower grass

pro-duction and less favourable grazing

conditions will impact cow yield and

on-going production.

0 0.1 0.2 0.3 0.4 0.5 0.6 0.7 0.8

02 Jan 30 Jan 27 Feb 26 Mar 23 Apr 21 May 18 Jun 16 Jul 13 Aug 10 Sep 08 Oct 05 Nov 03 Dec

N Z Pastu re Gr o wt h In d e x

New Zealand Pasture Growth Index

2011 2012 _{Source: Reuters} 0 200 400 600 800 1,000 1,200 1,400 1,600 1,800 60% 80% 100% 120% 140% 160% 180% 200% 220% 240%

Jun

Jul

Aug

Sep

Oct

Nov

Dec

Jan

Feb

Mar

Apr

May

C

u

mu

lati

ve

M

ilk

So

lid

s

('

000 To

n

e

s)

%

o

f 2007

08/09 09/10 10/11 11/12 12/13 MS 07/08 MS 09/10 MS 10/11 MS 11/12 MS 12/13

Source: Dairy Companies Association of New Zealand

(4)

14 Dec

07 Dec

Change OI

14 Dec

07 Dec

Change OI

3440

3423



0.49%

-

Dec-12 US$/tonne

3180



0.00%

775 Dec-12 €/tonne

3475

3400



2.21%

5 Jan-13 US$/tonne

3250



0.00%

175 Jan-13 €/tonne

3388

3350

0.78%

0 Jul-13 US$/tonne

3285



0.00%

0 14 Dec

2.94%

10 May-13 €/tonne

2550



0.00%

0 Jul-13 €/tonne

2550



0.00%

0 14 Dec

07 Dec

Change OI

Dec-12 US$/tonne

3460



0.00%

143 Jan-13 US$/tonne

3490

3480

0.28%

0 May-13 US$/tonne

3580



0.00%

0 Jun-13 US$/tonne

3285



0.00%

0 Jul-13 US$/tonne

3285



0.00%

0 14 Dec

07 Dec

Change OI

14 Dec

07 Dec

Change OI

990



0.00%

-

Dec-12 US$/tonne

3200



0.00%

0.00%

0.00%

0 14 Dec

07 Dec

Change

Total OI

Units

Class III Milk

19



0.43%

20169 US$/cwt

-4

Class IV Milk

18



0.00%

1040 US$/cwt

-6

Cheese (Cash Settled)

2



-0.17%

4626 US$/lb

-60

Butter (Cash Settled)

160

161



-0.62%

2760 US

¢

/lb

-66

Nonfat Dry Milk

155

154



0.81%

455 US

¢

/lb

-26

2681

2596

311

302 2990

Chicago Mercantile Exchange

AMF Futures

Whey Futures

Spot Ref (DE/NL/FR)

14 Dec (€/tonne)

Dairy Market Weekly Recap

Spot Ref (DE/NL/FR)

Butter Futures

WMP Futures

SMP Futures

Eurex Futures

NZX Futures

Spot Ref (DE/NL/FR)

Dec-12

Ref Month

Dec-12

0 500 1000 1500 2000 2500 3000 3050 3100 3150 3200 3250 3300 3350 3400 3450

Dec 12 Jan 13 Feb 13 Mar 13 Apr 13 May 13 Jun 13 Jul 13

O pe n Int e re st U SD /t onne

NZX WMP Forward Curve

14 Dec 07 Dec 0 10 20 30 40 50 60 70 80 90 3050 3100 3150 3200 3250 3300 3350 3400 3450 3500

Dec 12 Jan 13 Feb 13 Mar 13 Apr 13 May 13 Jul 13

O pe n Int e re st € /t onn e

Eurex Butter Forward Curve

14 Dec 07 Dec

(5)

About Eurex Exchange

Eurex Exchange is one of the leading global derivatives exchanges. Our offering comprises a broad range

of futures and options on traditional and alternative asset classes as well as a growing range of

commodi-ties including precious metals, energy and agricultural derivatives. Together, Eurex Exchange and the

In-ternational Securities Exchange (ISE) have daily trading volumes of about 10.5 million contracts.

Eurex Exchange is a member of Eurex Group which also comprises the International Securities Exchange

(ISE), European Energy Exchange (EEX), Eurex Clearing, Eurex Bonds and Eurex Repo.

www.eurexchange.com

About FCStone

INTL FCStone's customers include the producers, processors and end users of virtually every major

trad-ed commodity; commercial counter-parties; governmental, non-governmental and charitable

organiza-tions; institutional investors; brokers; professional traders; commercial banks; and major investment

banks.

Among our services are the proprietary Integrated Risk Management Program (IRMP), as well as

ex-change and OTC execution and clearing services, designed to limit risk and enhance margins and

bottom-line results; physical trading in base metals, precious metals and grains; a global foreign exchange and

currency payment service; asset management; equities market-making; securities execution and trading;

and investment banking advisory services.

www.intlfcstone.com

FCStone Europe

Dairy Contact Details

European Office: +353 1 6349140

Charlie Hyland:

[email protected]

Liam Fenton:

[email protected]

John Lancaster:

[email protected]

(6)

Deutsche Börse AG (DBAG), Clearstream Banking AG (Clearstream), Eurex Frankfurt AG, Eurex Clearing AG (Eurex Clearing) as well as Eurex Bonds GmbH (Eurex Bonds) and Eurex Repo GmbH (Eurex Repo) are corporate entities and are registered under German law. Eurex Zürich AG is a corporate entity and is regis-tered under Swiss law. Clearstream Banking S.A. is a corporate entity and is regisregis-tered under Luxembourg law. U.S. Exchange Holdings, Inc. and International Secu-rities Exchange Holdings, Inc. (ISE) are corporate entities and are registered under U.S. American law. Eurex Frankfurt AG (Eurex) is the administrating and operat-ing institution of Eurex Deutschland. Eurex Deutschland and Eurex Zürich AG are in the followoperat-ing referred to as the “Eurex Exchanges”.

All intellectual property, proprietary and other rights and interests in this publication and the subject matter hereof (other than certain trademarks and service marks listed below) are owned by DBAG and its affiliates and subsidiaries including, without limitation, all patent, registered design, copyright, trademark and service mark rights. While reasonable care has been taken in the preparation of this publication to provide details that are accurate and not misleading at the time of publication DBAG, Clearstream, Eurex, Eurex Clearing, Eurex Bonds, Eurex Repo as well as the Eurex Exchanges and their respective servants and agents (a) do not make any representations or warranties regarding the information contained herein, whether express or implied, including without limitation any implied warranty of mer-chantability or fitness for a particular purpose or any warranty with respect to the accuracy, correctness, quality, completeness or timeliness of such information, and (b) shall not be responsible or liable for any third party’s use of any information contained herein under any circumstances, including, without limitation, in connection with actual trading or otherwise or for any errors or omissions contained in this publication.

This publication is published for information purposes only and shall not constitute investment advice respectively does not constitute an offer, solicitation or recom-mendation to acquire or dispose of any investment or to engage in any other transaction. This publication is not intended for solicitation purposes but only for use as general information. All descriptions, examples and calculations contained in this publication are for illustrative purposes only.

Eurex and Eurex Clearing offer services directly to members of the Eurex exchanges respectively to clearing members of Eurex Clearing. Those who desire to trade any products available on the Eurex market or who desire to offer and sell any such products to others or who desire to possess a clearing license of Eurex Clearing in order to participate in the clearing process provided by Eurex Clearing, should consider legal and regulatory requirements of those jurisdictions relevant to them, as well as the risks associated with such products, before doing so.

Eurex derivatives (other than EURO STOXX 50®_{Index Futures contracts, EURO STOXX}®_{Select Dividend 30 Index Futures contracts, STOXX}®_{Europe 50 Index}

Futures contracts, STOXX®_{Europe 600 Index Futures contracts, STOXX}®_{Europe Large/Mid/Small 200 Index Futures contracts, EURO STOXX}®_{Banks Futures}

contracts, STOXX®_{Europe 600 Banks/Industrial Goods & Services/Insurance/Media/Personal & Household Goods/Travel & Leisure/Utilities Futures contracts, Dow}

Jones Global Titans 50 IndexSM_{Futures contracts, DAX}®_{Futures contracts, MDAX}®_{Futures contracts, TecDAX}®_{Futures contracts, SMIM}®_{Futures contracts, SLI}

Swiss Leader Index® Futures contracts, Eurex inflation/commodity/weather/property and interest rate derivatives) are currently not available for offer, sale or trading in the United States or by United States persons.

Trademarks and Service Marks

Buxl®_{, DAX}®_{, DivDAX}®_{, eb.rexx}®_{, Eurex}®_{, Eurex Bonds}®_{, Eurex Repo}®_{, Eurex Strategy Wizard}SM_{, Euro GC Pooling}®_{, FDAX}®_{, FWB®, GC Pooling}®_,,_GCPI®_{, MDAX}®_,

ODAX®_{, SDAX®, TecDAX}®_{, USD GC Pooling}®_,_VDAX®_{, VDAX-NEW}®_{and Xetra}®_{are registered trademarks of DBAG.}

Phelix Base® and Phelix Peak® are registered trademarks of European Energy Exchange AG (EEX). The service marks MSCI Russia and MSCI Japan are the exclusive property of MSCI Barra.

iTraxx®_{is a registered trademark of International Index Company Limited (IIC) and has been licensed for the use by Eurex. IIC does not approve, endorse or}

recom-mend Eurex or iTraxx®_{Europe 5-year Index Futures, iTraxx}®_{Europe HiVol 5-year Index Futures and iTraxx}®_{Europe Crossover 5-year Index Futures.}

Eurex is solely responsible for the creation of the Eurex iTraxx®_{Credit Futures contracts, their trading and market surveillance. ISDA}® _{neither sponsors nor endorses}

the product’s use. ISDA®_{is a registered trademark of the International Swaps and Derivatives Association, Inc.}

IPD UK Annual All Property Index is a registered trademark of Investment Property Databank Ltd. IPD and has been licensed for the use by Eurex for derivatives. SLI®_{, SMI}®_{and SMIM}®_{are registered trademarks of SIX Swiss Exchange AG.}

The STOXX®_{indexes, the data included therein and the trademarks used in the index names are the intellectual property of STOXX Limited and/or its licensors}

Eurex derivatives based on the STOXX®_{indexes are in no way sponsored, endorsed, sold or promoted by STOXX and its licensors and neither STOXX nor its}

licen-sors shall have any liability with respect thereto. .

Dow Jones, Dow Jones Global Titans 50 IndexSM_{and Dow Jones Sector Titans Indexes}SM_{are service marks of Dow Jones & Company, Inc. Dow Jones-UBS}

Com-modity IndexSM_{and any related sub-indexes are service marks of Dow Jones & Company, Inc. and UBS AG. All derivatives based on these indexes are not}

spon-sored, endorsed, sold or promoted by Dow Jones & Company, Inc. or UBS AG, and neither party makes any representation regarding the advisability of trading or of investing in such products.

All references to London Gold and Silver Fixing prices are used with the permission of The London Gold Market Fixing Limited as well as The London Silver Market Fixing Limited, which for the avoidance of doubt has no involvement with and accepts no responsibility whatsoever for the underlying product to which the Fixing prices may be referenced.

PCS® and Property Claim Services® are registered trademarks of ISO Services, Inc.

Korea Exchange, KRX, KOSPI and KOSPI 200 are registered trademarks of Korea Exchange Inc.