Countus Dairy Cattle Index
The rate of return of dairy cattle is not yet fixed
It is searching for the right course in the dairy market. This uncertainty makes it difficult to make statements about the further development of the return on the dairy farm. In the meantime, the Countus Dairy Cattle Index has already had to take a step back, but that is not unusual for January.
December probably felt like a cherry package, especially for suppliers to FrieslandCampina. Then the processor increased the milk price sharply, giving the dairy farmers more financial scope. In January, the premium disappeared again partly.
The Melkee Index appears to be less volatile and manages to remain above 125 points for most of January. Here the 10-year average counts as 100 points. In week 4, the index drops to 121,80 points. The index will hold above 110 points through the summer, based on the futures market and historical data. This provides insight into a significant improvement in yield compared to 2016. Whether this also translates into the dairy farms will depend on the impact that the phosphate reduction plan will have.
Yet there is still a small but, because the milk market is located at a kind of intersection. After a gloomy January, a trend break is seen at the beginning of February. It is now the turn of exports and the milk supply to determine which course the prices will follow. If these two factors do not cooperate, it is quite possible that prices will actually take a step back.
The feed price is less uncertain in this regard. Concentrate feed is based on a large worldwide availability of grain, where the more local fodder production is given breathing space due to the view of fewer dairy cows in the Netherlands. Livestock has also declined in France and Germany, helping to curb the demand for local feed. Other components such as manure and interest also do not immediately provide insight into cost increases.
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