Phosphate reduction plan first safety net for milk price

At the end of January, the supply figures in France are causing some confusion. Although considerably lower supply figures were reported in the last weeks of December, at the beginning of January it appears to be not too bad. For example, France recorded a minus of 2 percent in week 5. At the same time, Germany recorded a minus of 4,5 percent.

The milk supply also continues to struggle in the United Kingdom (UK). After slightly more milk could be recorded for December, January again produces poorer results. Once again a minus of 4,8 percent is recorded compared to 2016, where 2015 yielded 2,5 percent less milk. Something that is partly attributed to a milk price that still does not match the feed price. In Flanders, 7 percent more milk has already been reported. 

Slightly less milk in the UK and slightly more in France, Germany and the Netherlands are slowly confronting the market with more milk. The pressure on the spot market therefore comes from Poland and France. In Germany, demand from Italy and more demand from retail are making things a little easier again.     

For example, the price for raw milk in the north of the country remains at 29 euros per 100 kg of milk, delivered at 3,7 percent fat, compared to 30 euros in the south at 3,7 percent fat. In the Netherlands, the raw milk trade remains quiet. Under pressure from lower prices for manufactured products, the price drops further to 30,50 euros per 100 kg of milk, delivered at 4,4 percent fat. 

In the south of Germany, things are slightly better due to more demand from Italy, but also increased demand from retail. Unfortunately, there is no guarantee that demand will increase again in the Netherlands. In a falling market, people often wait until the bottom is found. 

It is also the reason that the cream price takes a step back to reach 4,30 euros per kg ex factory. Butter prices are also falling as a result. What doesn't help is the expiration of private butter storage. Because butter prices are still relatively high, it does not encourage product storage. The futures market also indicates lower prices for further away.

In the Netherlands, the price drops to 417 euros per 100 kg, compared to 4,05 to 4,25 euros per kg for butter. This in a waiting market. A somewhat more 'uneinheitlichen' market is emerging for cheese. In Germany, the price still remains at 3,15 to 3,35 euros per kg. In the meantime, the 3 euro limit is already in sight on the so-called spot market.        

While the price of cheese is still stable, the price of whole milk powder is taking a step back. This drops to 308 euros per 100 kg in the Netherlands. In Germany the price drops to 3.120 to 3.220 euros per tonne. Skimmed milk powder must also follow the line of declines and drop to 2.050 to 2.170 euros per tonne. In the Netherlands the price is 212 euros per 100 kg.

When looking at the futures market for milk powder, it looks like March will be the turning point. Which means it looks like the market is counting on the phosphate reduction plan.  

However, skimmed milk concentrate illustrates that the market is not yet running smoothly. This means that the price amounts to 1.600 euros per tonne of dry matter. A price that is reasonable for the milk powder but does not encourage higher production. Which indicates that players are being cautious.    

Unfortunately, no turning point in the market yet this week, but there are small bright spots in Germany. The crux remains the milk supply. After the closure, there was no room for extra milk and there is still no room, which means the market remains sensitive to the smallest changes. Something that can work out well when supply falters, but can just as quickly turn against the dairy farmer if there is a little too much supply.

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