Why milk supply is not yet a cause for concern

At the beginning of February, the milk supply is still barely growing. The key question is what the sector plan for phosphate reduction will do to the supply. Because a stopper scheme is also in force, the milk supply will decrease in any case.

In France, feed plays a dominant role. This means that there is no immediate prospect of more milk until around April. In Germany, the weather in particular has an impact on milk supply. As long as the milk supply in Western Europe continues to struggle, the milk market can maintain its balance.

It is mainly the fresh market that has to lead the way. For example, more demand for fat results in a cream price of 4,60 euros per kg ex work. Butter prices are also picking up again. A price just under 4 euros has now been agreed with Aldi and Lidl for butter. A step back compared to the previous price of 4,44 to 4,52 euros per kg. But because butter was a bit too expensive, this was not a strange development.   

However, the slightly better situation in butter is still insufficient to influence sentiment on the cheese market. Prices remain under pressure there. For foil Gouda and Edam, a price of 2,70 to 2,80 euros per kg ex works is quoted. On the German stock exchange, Gouda quotes a price of 3 to 3,25 euros per kg ex work.   

Yet it is mainly skimmed milk powder that is once again becoming a concern. In the Netherlands, the price fell to 195 euros per 100 kg, while animal feed is worth 180 euros. The Germans quote a price of 1.940 to 2.050 euros per tonne. On the world market, the EU is also hitting America in its tracks again. We also cautiously mentioned some prices for the second quarter. These are around 1.800 euros per tonne.

Skimmed milk concentrate must therefore be obtained from the fresh market. That price remains at 1.625 euros per tonne of dry matter ex-factory. While there is still some trade in cream and concentrate, the raw milk trade remains quiet. In the Netherlands, the price rises to 32,25 euros per 100 kg of milk, delivered at 4,4 percent fat. In Germany, the price at 3,7 percent fat is 31,50 euros for the north and 32 euros for the south.

The way the market is going, there is no room for extra milk and it will arrive towards May. The recovery can therefore be called fragile and it is mainly hoped that dairy farmers will not do everything they can to supply more milk. However, there is no such concern until the grazing season opens.