Dairy market is approaching an exciting crossroads

On the other side of the world, New Zealand recorded a decline of minus 2,75 percent for December. The country is now starting to get out of season and therefore plays a smaller role on the world market. 

The lack of extra liters helps the market. However, there is also uncertainty about the further development of the milk supply. The key question is what effect the milk price will have on milk production. The Netherlands is the odd one out in this regard, because the pursuit of less phosphate will almost certainly yield less milk.

Uncertainty extends not only to supply, but also to demand. In any case, it increases at the beginning of February and sets a floor in the fresh produce market. For example, cream works out at 4,325 euros per kg of finished work and concentrate has a price of 1.625 euros per tonne of dry matter. It looks like demand will remain good in the coming week, but after that we will have to wait and see.

Another development may help here. In the Netherlands, for example, skimmed milk powder fell to 202 euros per 100 kg of milk. In Germany the price is 1.990 to 2.150 euros per tonne. The lower prices are not good news for emptying the intervention. It is precisely this that depresses the mood in milk powder even further. This makes the product less interesting for processors, which in turn can have consequences for the by-product cream. 

There is a good chance that the butter price will drop again next week. The current price is below 400 euros per 100 kg. Because the butter was overpriced, it also had to take a much bigger step back. 

Cheese closes the line. For example, the price in Germany drops to 3,10 to 3,35 euros per kg. The market is still calm. Too quiet, causing the price for foil cheese on the spot market to fall below 3 euros. Prices are even mentioned far below that, but this seems a bit too negative. Low prices are also circulating for cheddar, but again no progress can be found. Especially because that price can compete well on the world market, the question is whether the lowest prices are realistic.    

Raw milk prices are rising primarily due to a lack of sales pressure. This means that processors can ask higher prices, causing the price in the Netherlands to rise to 31 to 32,50 euros per 100 kg of milk, delivered at 4,4 percent fat. In Germany, the price in the north at 3,7 percent fat is 32 euros, compared to 32,50 euros per 100 kg of milk in the south. 

In New Zealand, reports remain negative about milk supplies, which could lead to higher prices on the Global Dairy Trade (GDT). Less positive are the lower prices for skimmed milk powder on the NZX. The market can still go in any direction and is therefore at a crossroads. The combination of sentiment and supply will determine the price. 

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